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“Reinsurance platform” to support life ILS growth: Rivas, Credit Suisse


The development of a “reinsurance platform” at Credit Suisse Insurance Linked Strategies Ltd. is set to further expand the unit’s capabilities in the global life reinsurance and ILS space, according to Javier Rivas, Director of ILS at the firm.

Demand in the life insurance industry for hedging mechanisms such as longevity swap transactions and mortality catastrophe bonds, for example, is expected to increase in the coming months and years.

With life insurers and pension funds eager to offset the impacts of longer life expectancies, and reinsurers increasingly looking to hedge against over-weighted mortality risks, the utilisation of insurance-linked securities (ILS) structures and capacity to play a role in the life space is predicted to grow.

This is a view shared by Credit Suisse’s ILS unit Director Javier Rivas, who underlined in a recent interview with Clear Path Analysis, that strong relationships with reinsurers, regulatory advances in Europe and in the U.S., and the division’s “reinsurance platform” signals further growth potential for the life ILS space.

“We have what we call our reinsurance platform, something special to the Credit Suisse ILS proposition. It consists of a number of fronters and rated carriers, and the recent addition of a Lloyd’s syndicate.

“For the first time this year, one of these will be able to write traditional life reinsurance, adding one more important way to transfer life risks to our platform, in addition to already existing ways like cat bonds, notes and swaps,” said Rivas.

Artemis discussed towards the end of last year that the Credit Suisse ILS team was capitalising a new Lloyd’s Syndicate, Syndicate 1856 with £90 million of capacity, in addition to its two rated reinsurance vehicles already up and running.

The Credit Suisse ILS team currently operates two rated reinsurance vehicles, in Kelvin Re and Humboldt Re. Which, both enable the firm to access the balance-sheets of global re/insurance players, facilitating the expansion of ILS capital into areas where ILS has perhaps a limited presence owing to difficulties with entry, or the dominance of the traditional rated balance-sheet.

And now, while unclear exactly which rated reinsurer Rivas is referring to, later this year the ILS unit will see one of its rated reinsurance vehicles commence writing traditional life reinsurance business, bolstering its capabilities in the global life arena.

“This will allow us to enter certain transactions and retro pools that were not accessible to us before. My colleagues on the non-life side have been doing this successfully for many years, so this means a new era for sourcing investments in life risks,” said Rivas.

With Humboldt Re or Kelvin Re to begin underwriting traditional life reinsurance business, the third-party investors that back the rated vehicle will gain access to a broader range of re/insurance-linked life business that is perhaps unattainable otherwise.

This offers the investors that operate in the rated reinsurer with another form of diversification in terms of both risks and potentially geography, depending on where Credit Suisse ILS sources the risks.

But importantly, it enables Credit Suisse with another avenue to access the life market, which, should it grow at the rate and pace predicted by some in the industry, could prove a valuable source of both hedging and revenue for the firm, along with the noted use of catastrophe bonds, swaps and notes.

All of this further supports the continued convergence of traditional insurance and reinsurance with the expanding ILS space, as companies like Credit Suisse continue to blur the lines in order to operate in the most efficient manner, with the most efficient capital, something that has become increasingly prevalent in the softening landscape.

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