The market should expect Swiss Re to proceed constructing out its capabilities across insurance-linked securities (ILS) and alternative reinsurance capital, as the corporate is benefiting from their growth, while investors in Alternative Capital Partners (ACP) structures have been having fun with “very strong performance”, CFO John Dacey said today.
Speaking through the reinsurance firm’s management dialogue with investors and analysts, Swiss Re CFO John Dacey highlighted the activities within the Alternative Capital Partners (ACP) unit as providing retrocessional relief in addition to 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 corporate disclosed its third-party capital under management has reached US $3.3 billion and this vital source of capability is serving to support its growth trajectory in natural catastrophe risk underwriting.
Dacey highlighted, “the relief we get from the activities within the ILS market, where we’ve increased materially the scale of our sidecars, we’ve increased materially our other risk transfers for giant losses.”
He went on to say, “The excellent news is the experience within the last years of Swiss Re because of very solid underwriting of this portfolio has left our investors on this space with a really strong performance.
“They’re glad about it, we’re glad 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 proceed to see opportunity to grow the gross line… we are able to proceed to seek out very interested investors to take a few of that risk off our hand for giant events.”
The Swiss Re CFO then went on to indicate the range of activities undertaken throughout the Alternative Capital Partners (ACP) unit.
“Along with this we’ve got a series of related businesses, which incorporates the structuring and placement of cat bonds for our clients, which incorporates an actual portfolio of cat bonds that we manage ourselves on a proprietary basis, includes some funds which we’ve opened up lately,” Dacey said.
Continuing, “These are all activities which might be adjoining, or actually right on top of our core capabilities on this space.
“You need to expect that we are going to proceed to construct those capabilities and proceed to construct the fee income related to that which 12 months in 2023 was approximating $200 million. This drops into the P&C Re bottom line.”