Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Swiss Re combines ILS & retro in new Alternative Capital Partners unit


Global reinsurance firm Swiss Re is re-organising its insurance-linked securities (ILS) and retrocessional capabilities, merging ILS and retro teams within one new unit named Alternative Capital Partners (ACP).

swiss-re-building-logo-newThe reinsurer has always had relatively distinct units for its insurance-linked securities (ILS) structuring and origination, as well as for retrocession.

But given the fact these two functions have increasingly come together, through retro provision, buying, catastrophe bond related activities and Swiss Re’s collateralised reinsurance sidecar Sector Re, it makes sense for them to be coming under one roof.

From September 1st, Swiss Re has a new team called Alternative Capital Partners (ACP), which will bring together the resources and capabilities of the reinsurers ILS team and Retro & Syndication team, the company told us.

This will create a “unified centre of expertise”, the firm said, covering all things alternative reinsurance capital, ILS and retrocession at Swiss Re.

We’d imagine this will allow the firm to recognise greater synergies between these related and increasingly interlinked activities, as well as to make increasing use of third-party capital where appropriate to the company.

Swiss Re has long been active in the ILS market, having been one of the first sponsors and facilitators of catastrophe bonds, had a reinsurance sidecar program that issues consistently for over a decade, while also offering a range of services to help its clients access alternative capital.

“Our strategy and underwriting approach remain unchanged; we have used third-party capital in the past and will continue to use hedging so that we can offer large cat capacity efficiently,” the company explained to us.

We understand that as part of this re-organisation there have been some changes to roles and titles in the ILS area of Swiss Re.

Jean-Louis Monnier has a new title of Head Retro & ILS Structuring and Origination, according to his Linkedin, having previously been Global Co-Head of ILS.

Other changes to roles and the structure are likely to become apparent as the new organisational structure takes shape and is bedded in.

As we recently discussed in this article, Swiss Re used an increased amount of third-party capital at renewals this year to support its natural catastrophe reinsurance exposures.

As a result of this and increased retrocession, the reinsurer ceded roughly 4% more of its catastrophe risk exposure to sources of retrocession, compared to the prior year.

Also of note, Swiss Re returned to the catastrophe bond market as a sponsor for the first time in some years in 2019.

All of which points to an increasing focus on how best to leverage third-party capital at the reinsurer, which seems to be a growing trend in 2019 as even the largest companies appear to be doubling-down on the capital markets.

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