Swiss Re Insurance-Linked Fund Management

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Swiss Re’s alternative capital fee income rises 72% to $74m in H1 2023


Higher assets under management and improved returns in the insurance-linked securities (ILS) funds and sidecar structures managed by Swiss Re’s Alternative Capital Partners (ACP) division have driven a significant increase in fee income and commissions earned by the reinsurer in the first-half of 2023.

Swiss Re Matterhorn Re catastrophe bondsSwiss Re’s collateralized reinsurance sidecar and insurance-linked securities (ILS) fund assets had grown by 29% through 2022, with third-party investor assets reaching $2.9 billion.

As a result, the overall assets under management of the Alternative Capital Partners (ACP) division, including Swiss Re’s investment shares in the vehicles, had reached $3.8 billion as of the beginning of 2023.

For the full-year 2022, Swiss Re’s fee and commission income earned via these ILS investment management and collateralised reinsurance sidecar activities reached an impressive $116 million for the full-year, a 36% increase on the prior year and the highest ever earned by the reinsurer.

2023 has started very well, it seems, with Swiss Re having earned $74 million of fee and commission revenues through the first-half, a strong start to the year.

It is a 72% increase on the H1 2022 figure of $43 million, which was itself well up on the $19 million of fee income earned in H1 2021.

With the second-half of the year tending to see more seasonal premium earnings flowing through to ILS funds and collateralised reinsurance vehicles, its safe to assume that if there are no significant catastrophe loss events that hit the ILS structures and funds Swiss Re manages, it is well on the way to another record year of fee income earned by its Alternative Capital Partners (ACP) division.

H2 2022 saw Swiss Re reporting $73 million of fee income from these ILS asset management activities, which suggests if the loss environment remains relatively comparable this year, the fee income Swiss Re reports for ACP for the full-year could be a lot higher.

Structuring fees, for Swiss Re Capital Markets work in the catastrophe bond and broader insurance-linked securities (ILS) sector, have also contributed to the ACP fee and commission income total in the past, so we assume they do today.

With the catastrophe bond market having been so busy in the first-half and Swiss Re Capital Markets remaining third in our leaderboard of catastrophe bond banks and brokers, this could also have been a factor, alongside the higher AUM in the sidecars and ILS funds managed by the ACP division.

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