Strategic decisions by investors drove Kelvin Re & Humboldt Re shuttering: Credit Suisse

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The shuttering of Guernsey based, Credit Suisse Insurance-Linked Strategies supported, reinsurance firms Kelvin Re and Humboldt Re is due to strategic decisions being taken by the ultimate institutional investors behind them, a Credit Suisse spokesperson told us.

credit-suisse-logoAs we reported earlier this week, reinsurance firms Kelvin Re and Humboldt Re are to cease underwriting new business immediately.

The shareholder and the Board of Directors of both Kelvin Re Limited and Humboldt Re Ltd. said that they had decided to cease underwriting new business for strategic reasons.

Those strategic reasons are now clear, after Credit Suisse confirmed that it is down to decisions taken by the main investors backing the reinsurance vehicles.

The spokesperson told us, “These two reinsurance entities, which are independent of Credit Suisse, are investments held by investment funds managed by Credit Suisse ILS. Due to independent strategic decisions by the two ultimate institutional investors this year, these entities will discontinue to participate in reinsurance activities for 2021.”

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

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

We assume that the backing for Humboldt Re is channelled into a single fund to support the reinsurance vehicle, which is the investment structure referenced as the backer.

“These two investment funds are expected to gradually reduce their asset size over the coming years. Other than that ILS specialist team at Credit Suisse Asset Management and the main ILS funds are not affected by these changes,” Credit Suisse’s spokesperson further explained.

End-investors in ILS have had a challenging few years, both due to the major catastrophe losses that affected the asset class since 2017 and now also due to the capital markets volatility and asset class fluctuation caused by the COVID-19 pandemic.

As a result, institutional investor motivations and strategies have been changing of late and it seems some of these factors will be behind the decisions taken by the investors supporting these reinsurers.

The shuttering of Kelvin Re and Humboldt Re doesn’t change anything for Credit Suisse Insurance-Linked Strategies more broadly though, with the investment manager continuing to be one of the largest in ILS and its main ILS fund operations continuing as normal.

“Credit Suisse ILS continues to have a strong and broad market access to rated and collateralized reinsurance across all major markets. With the independent strategic decisions of Humboldt Re and Kelvin Re there will be no change for CSILS’s investment capabilities and fund platform,” the company’s spokesperson said.

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