About Us Investment Philosophy
We have a strong focus on underwriting discipline. Given that the majority of today’s triggers are on an indemnity basis, the quality of risks in the underlying portfolio makes an enormous difference. This makes a sound due diligence process, a profound knowledge of reinsurance, and long-standing and proven experience in the market essential.
In general, our principles compare with those adopted by the largest reinsurers and include the following:
- Ensuring that cedents have retentions so that interests are aligned
- Avoidance of negative selection (full subject coverage)
- Diversification of the underlying policy portfolios
- Adjustments for mismodeled regions and perils
A strong origination network and a broad cooperation with counterparties are required to generate attractive risk-adjusted returns. Given our long track record, large-size capability and unique platform, we have established ourselves as a well-recognized counterparty in the catastrophe reinsurance market and have developed strong relationships across the major (re-)insurance markets.
We believe that striving for innovation is essential to maintaining a competitive advantage, especially in a relatively young and fast-growing market such as ILS. Our innovative approach has enabled us to constantly enhance our market access and introduce new cost-efficient risk-transfer structures.
Size has become an important success factor when negotiating on capacity and pricing. While sizeable ILS assets can be disadvantageous in the cat bond market (given its limited size), it is an instrumental advantage in the traditional reinsurance market, as decent line sizes are often an important consideration for (re-)insurance counterparties. With over USD 7.5 bn1 of assets under management and the reinsurance leverage potential with the rated vehicles, we can offer attractive line sizes (i.e. volume per counterparty) comparable to the largest catastrophe reinsurers in the world.
We pursue a diversified investment strategy and aim to efficiently diversify our portfolios across various regions and risk perils, as well as through different trigger types in order to limit and minimize tail risks.
Given the large concentration of US hurricane risks in the reinsurance and especially in the cat bond market, we seek to diversify our portfolios and limit the allocation to US windstorms with other perils and regions such as, but not limited to, Japanese earthquakes or European windstorms.
This approach enables us to reduce the drawdown potential from one single event and to target attractive risk-adjusted returns over time.
Active pre- and post-event trading is an integral part of our strategy and an opportunity to generate additional alpha for investors.
Past events have proven that, thanks to our technological advantage and the profound knowledge and long-standing experience of our investment team, we are able to evaluate and assess early loss estimates on an event and deploy active trading strategies in order to limit on a best-effort basis potential losses.