Swiss Re to continue building ILS and alternative capital capabilities: CFO Dacey

The market should expect Swiss Re to continue building out its capabilities across insurance-linked securities (ILS) and alternative reinsurance capital, as the company is benefiting from their growth, while investors in Alternative Capital Partners (ACP) structures have been enjoying “very strong performance”, CFO John Dacey said today.

Speaking during the reinsurance firm’s management dialogue with investors and analysts, Swiss Re CFO John Dacey highlighted the activities in the Alternative Capital Partners (ACP) unit as providing retrocessional relief as well as earnings through fee income.

On the Alternative Capital Partners (ACP) business and ILS related activities, Dacey said, “This has grown materially, as our expected nat cat losses have grown materially.”

As we reported earlier today, the company disclosed its third-party capital under management has reached US $3.3 billion and this important source of capacity is serving to support its growth trajectory in natural catastrophe risk underwriting.

Dacey highlighted, “the relief we get from the activities in the ILS market, where we’ve increased materially the size of our sidecars, we’ve increased materially our other risk transfers for large losses.”

He went on to say, “The good news is the experience in the last years of Swiss Re thanks to very solid underwriting of this portfolio has left our investors in this space with a very strong performance.

“They’re happy about it, we’re happy about it. It allows us to renew this and even expand the programs at very interesting rates.”

Dacey further explained, “So we’ve not been handing them losses, our interests are deeply aligned with the exposures they get from us, and as we continue to see opportunity to grow the gross line… we can continue to find very interested investors to take some of that risk off our hand for large events.”

The Swiss Re CFO then went on to point out the range of activities undertaken within the Alternative Capital Partners (ACP) unit.

“In addition to this we’ve got a series of related businesses, which includes the structuring and placement of cat bonds for our clients, which includes an actual portfolio of cat bonds that we manage ourselves on a proprietary basis, includes some funds which we’ve opened up in recent years,” Dacey said.

Continuing, “These are all activities that are adjacent, or actually right on top of our core capabilities in this space.

“You should expect that we will continue to build those capabilities and continue to build the fee income related to that which year in 2023 was approximating $200 million. This drops into the P&C Re bottom line.”