About Us Investment Philosophy
We have a strong and disciplined focus on underwriting and risk modeling. Given that the majority of today’s triggers are on an indemnity basis, the quality and the pricing of inherent risks in the underlying portfolio makes an enormous difference. This makes superior analytical capabilities, a sound due diligence process, a profound knowledge of reinsurance and a long-standing and proven track record 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 (e.g. full subject coverage)
- Diversification of the underlying policy portfolios
- Adjustments for mis-modeled regions and perils
A strong origination network and a broad cooperation with counterparties are required to help 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 expand and enhance our market access and introduce new cost-efficient and capital-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 around USD 6 bn1 of assets under management we can offer attractive line sizes (i.e. volume per counterparty) comparable to the largest property 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 and structures (e.g. first and subsequent events) 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 wind with other perils and regions such as but no limited to Japanese earthquakes or Europe wind.
This approach enables us to reduce the drawdown potential from one single event and to target attractive risk-adjusted returns over time.
Active pre-, live 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, superior analytical capabilities, profound knowledge and long-standing experience of our investment team, we have been able to evaluate and assess early loss estimates on an event and deploy active trading strategies in order to limit and hedge potential losses on a best effort basis.