Swiss Re Insurance-Linked Fund Management

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Sale agreed for Credit Suisse linked reinsurer Humboldt Re


Humboldt Re Ltd., one of the two Guernsey based, Credit Suisse Insurance-Linked Strategies supported rated reinsurance carriers has reportedly been the subject of the signing of a sale purchase agreement, suggesting a new owner has been found.

credit-suisse-logoAs a reminder, Humboldt Re and another Credit Suisse ILS linked reinsurance company Kelvin Re, were both being closed down due to strategic decisions taken by the ultimate institutional investors behind them.

Humboldt Re and Kelvin Re both received their financial support from insurance-linked securities (ILS) investors and funds under the management of Credit Suisse Asset Management’s specialist ILS investment unit.

Humboldt Re was backed by capital from some of the insurance-linked securities (ILS) funds managed by Credit Suisse Asset Management (CSAM), while Kelvin Re’s backing came from investments made by the Abu Dhabi Investment Council, a sovereign wealth investor.

As we explained recently, the Pension Fund of Credit Suisse Group reported that a CHF 357.1 million restructuring of insurance-linked securities (ILS) investments and also revealed an exposure to the running-off of the rated reinsurance company Humboldt Re.

Humboldt Re has been up for sale, as being a rated company and a ready to go underwriting platform it should be attractive to those looking to gain access to global reinsurance markets through a regulated reinsurer.

It seems the sale negotiations could have been successful, as rating agency AM Best said today that there has been a “recent signing of a sale purchase agreement by Humboldt Re’s shareholder.”

AM Best has maintained the under review with negative implications status of Humboldt Re’s ratings, which it says “reflects AM Best’s uncertainty regarding the impact that the change in ownership would have on the company’s prospective financial strength.”

The terms of the sale are confidential at this time, the rating agency explained.

AM Best said that it now expects to resolve the under review status once this sale transaction has completed, at which time a full analysis of Humboldt Re’s credit fundamentals can be performed within its new group structure.

So it looks like the sale process is drawing to its conclusion, in which case the main shareholder, which we assume to be certain funds under the management of the Credit Suisse ILS team, or an entity related to the wider Credit Suisse group, will be able to recognise the value locked up in the rated reinsurance company and that should flow to the benefit of the company and any investors backing the funds or positions that backed Humboldt Re.

Positively, AM Best also noted that, “Since Humboldt Re entered runoff in December 2020, its underwriting exposures have reduced and its reported capital has increased. The company produced a small profit in the first quarter of 2021.”

That sounds positive for the unwinding of this position and recovery of value for all involved.

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