Structured Prospective Reinsurance Solutions

At Swiss Re we feel that the era where we differentiate structured reinsurance or non-traditional reinsurance from regular or traditional reinsurance is behind us. It is not about specific features and characteristics of reinsurance products; the client's motivation and benefit metrics are in the center of our considerations. Furthermore it is not about specific lines of business, but we capture all non-life lines of business – from Property & Casualty lines to Specialty lines of business (Aviation, Marine, Engineering, Agriculture, Credit & Surety, and others).

This allows to design and tailor reinsurance solutions or capital market risk transfer solutions in order to support the client's individual goals. Our teams have the entire product suite and expertise of Swiss Re at their finger-tips; hence it all starts with the client's motivation – once this is well understood, the solution is then co-designed together with the client. Rapid prototyping and continuous dialogue and refinements allow to design the best solution in the intersection of client's needs and Swiss Re's capabilities.

Over the last couple of years, we have seen the following market trends and market themes.

  • Accounting related themes: International financial reporting standards are subject to changes and modifications, e.g. IFRS 4 phase 2, but also changes in terms of IFRS 9, further potential considerations regarding US GAAP and IFRS convergence. On a local level, many countries have adopted and continue to adopt IFRS for their local financial reporting regimes. While accounting considerations per se are not drivers of reinsurance solutions, understanding potential ramifications and consequences for volatility and capital management is key.
  • Themes related to regulatory changes: With the International Association of Insurance Supervisors we see more and more countries and regions migrating to more risk based solvency regimes. Obviously, reinsurance as a capital substitute is an instrumental part of any pillar 1 considerations (quantitative approaches and capital management). Moreover, for selected clients we also share our own approaches in risk management and risk reporting (pillar 2 as well as pillar 3) and compare these with standards in the various markets.
  • Holistic risk management themes: We see more clients striving to optimize their balance sheet and their earnings power from a corporate and enterprise perspective. Smart combinations of business unit protections and corporate risk management or enterprise risk management solutions want to be embedded into the client's risk culture. Ultimately it is about fully leveraging diversification potential across various dimensions of risks.
  • M&A related topics: The traditional suite of solutions is well known – capital management and purchasing price optimization for buyers and sellers. In addition it is also about management of volatility and potential surprises or peer deviations; this refers to pre-merger as well as post-merger approaches.  
  • Themes related to in-force portfolios: While this is more a Life & Health related motivation, we see clients also exploring the full potential on the non-life side of the house. Reserves, reserve risks, capital consumptions,  counterparty considerations, and more – these topics can be discussed and managed with support of customized reinsurance.

On that basis, we have been able to more specifically cluster client's motivation into the following areas.

  • Enhance efficiency: Some clients continue to leverage market price developments; with that, these clients introduce a dependency on reinsurance market price and reinsurance capacity into their corporate risk management strategy. Most clients revisit and optimize their reinsurance and risk mitigation structure overall. Typically these comprise of three avenues: (a) risk transfer and protection needs, (b) strategic approaches to capital management and corporate finance, (c) franchise management and management of surprise potentials.
  • Protect and safeguard net volatility: Reinsurance goes far beyond trading premium versus losses, also far beyond capital cost relief versus ceded margins. Managing the firm's credibility, addressing surprise potential  for stakeholders, and therefore protecting the firm's franchise value and optimize the investor's and stakeholders performance targets.
  • Capital management and support growth: Reinsurance serves as a capital substitute. Therefore our teams support smart combinations of equity, debt, and reinsurance. This can support achieving rating capital targets, regulatory capital adequacy, or other capital management related topics like capital fungibility and RoE optimization.
  • Specifically tailored and innovative solutions: This is where we feel especially comfortable. Share your dream with us, bring your challenge. Our teams are more than happy to explore together. Sometimes these discussions do not lead to reinsurance solutions, sometimes they lead to unique approaches, leveraging the full bandwidth of Swiss Re 's engagement model.

For non-life reinsurance, Our Structured Solutions teams are embedded in our local client teams and cross functional teams. This allows to leverage the specific expertise around the globe whereas being fully embedded in individual client accounts. The following examples characterize that we leverage the seamless organizational set-up in client teams:

  • Traditional solutions and Structured Solutions: Swiss Re does not differentiate the types of solutions. We make sure that the appropriate expertise and experience is involved. Sometimes that is client facing, sometimes that is behind the scenes.
  • Prospective Solutions and Capital Market Solutions: Swiss Re feels uniquely positioned to fully leverage reinsurance and capital market approaches, and to find combinations of these approaches which allow a best fit for our clients.
  • Prospective Solutions and Retrospective Solutions: In many instances it is not about an either-or approach, but about a smart combination of retrospective and prospective reinsurance approaches. We cover the entire range from separate products to combined packages and uniquely integrated solutions.
  • Retrospective Solutions and Capital Market Solutions: This is an exciting field, where we explore specific situations together with selected clients.

Swiss Re' Prospective Solutions focuses on non-life lines of business. If you have an inquiry about a Life & Health Structured Solutions, please see LHSS and Admin Re®.

Structured Reinsurance Solutions

Structured Solutions: Tailored structures to help you meet your strategic objectives

Read the whole story

RetroSpective Solutions

Swiss Re’s Retrospective Solutions team provides effective, customizable solutions for the risks associated with your unresolved non-life liabilities. Retrospective Solutions identifies opportunities...

Read the whole story