Structured solutions: the increased trend for customised solutions
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Today's market environment is more volatile and competitive than ever. The changing market outlook is putting pressure on balance sheets as well as risk and capital strategies. Swiss Re's local teams of structuring experts draw on our global experience and expertise to deliver carefully tailored structured solutions that support clients looking for more efficient risk protection. At the same time we optimise capital structures and efficiency while minimising capital costs.
At Swiss Re, we have a proven track record in closing bespoke transactions that enhance the intrinsic value of our clients' balance sheets and portfolios. In 2019 we helped 160 clients in 35 countries release more than USD 1.8bn of capital for their property & casualty businesses through structured reinsurance solutions.
And when the situation changes, our structured solutions enable our clients to adjust and grow through regulatory regime changes, market dislocations and M&A activity.
Our clients achieve a range of benefits from our experience and capabilities. The majority fall into the following categories:
- enhance efficiency: Our clients rely on reinsurance that is firmly embedded into their corporate risk management strategies. Clients tend to carefully navigate market price developments, capacity supply whilst regularly revisiting and optimising their reinsurance and risk mitigation structures. Typically, these support three functions: (a) risk transfer and protection needs, (b) strategic approaches to capital management and corporate finance, (c) franchise management and management of surprise potentials. Efficiently managing and balancing these often-competing challenges for our clients is where we excel.
- protect and safeguard net volatility: Reinsurance goes far beyond trading premium versus losses, or capital cost relief versus ceded margins. For example, it can help manage the firm's credibility by reducing surprise potential for stakeholders, and therefore protecting the firm's franchise value and optimising investors' and stakeholders' performance targets.
- support growth and capital management: Reinsurance serves as a capital substitute and deriving the optimal capital structure through smart combinations of equity, debt, and reinsurance creates value. This can support achieving rating capital targets, regulatory capital adequacy, or other capital management-related topics such as capital fungibility and RoE optimisation.
- manage your legacy: One of the biggest drivers of volatility and capital consumption is unresolved non-life liabilities. There is a growing demand for transferring the underwriting uncertainty, the operational and capital burden implicit in these reserves through smart tailor-made retrospective reinsurance solutions.
- uniquely tailored and innovative solutions: This is where we feel especially comfortable. Share your aspirations with us, bring us your challenge. Our teams are more than happy to explore possibilities and co-develop solutions with you. Sometimes these discussions don't lead to reinsurance solutions, but they can lead to unique approaches that leverage the full bandwidth of Swiss Re's engagement model.