Swiss Re Insurance-Linked Fund Management

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Swiss Re sets up EU entity for derivative & ILS continuity post-Brexit


Global reinsurance firm Swiss Re has established a new European entity in Luxembourg named Swiss Re Capital Markets Europe, S.A. to ensure it has trading continuity for derivative contracts in the weather and energy risk transfer space, as well as ILS instruments, after Brexit.

Brexit imageWith the UK’s position in the European Union still uncertain and Brexit still ploughing ahead, companies in insurance and reinsurance have been setting up new trading entities if required to provide continuity for partners and ceding clients.

Swiss Re is particularly active in the weather risk transfer and energy risk space, with financial derivatives a key tool that the firm uses in servicing its corporate clients in this space and facilitating their weather hedging needs.

The reinsurer is also active in insurance-linked securities (ILS) where derivatives can be utilised in transactions which are then fully collateralised and backed by third-party investor capital.

So to ensure continuity for clients seeking these derivative hedges and risk transfer products, which are often linked to weather indices or parametric triggers, Swiss Re’s commercial risks division, Swiss Re Corporate Solutions, has established Swiss Re Capital Markets Europe (SRCME) in Luxembourg so that it can continue to transact with counter parties in the European Community after Brexit.

Stuart Brown, currently the reinsurers Head of Origination, Weather & Energy EMEA Asia-Pacific, for the Corporate Solutions division, has been named Chief Executive Officer (CEO) of the Swiss Re Capital Markets Europe.

Brown has led the Swiss Re Corporate Solutions’ sales team for weather derivatives and other insurance protection products, with a particular focus on the needs of the energy markets for almost nine years.

He will continue to manage the Swiss Re team of originators for weather & energy insurance and risk transfer business in EMEA and APAC regions.

With any potential Brexit arrangement between the UK and Europe still clouded in uncertainty, those transacting sophisticated financial instruments such as derivatives and ILS, for which Swiss Re Capital Markets can act as structurer, broker and dealer, need to ensure they can continue to reach trading partners in the EU no matter what happens if or when the UK exits.

As a result, setting up new operations in locations with access to the broad EU marketplace, such as Luxembourg, is key for firms like Swiss Re to ensure they can offer clients the wide range of risk transfer solutions they are used to accessing through the reinsurer.

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