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Risk Trading - Munich Re

Capital Partners

Services offered

By expanding its traditional reinsurance programmes to include alternative risk transfer structures, Munich Re can offer its clients access to the capital markets.

In addition to financial reinsurance and traditional reinsurance, alternative risk transfer products are increasingly establishing themselves as efficient risk management tools especially suited to covering peak risks from natural catastrophes.

Risk trading means transferring risks to the capital market, particularly through securitisation by means of insurance-linked securities (ILS) and subsequent trading of such securities on the secondary market. Although ILS are mainly used to protect property risks against natural hazards, these securities are also utilised in life insurance, for instance in order to hedge against pandemic risks. ILS have gained a foothold as an alternative asset category for investors and as an alternative form of reinsurance for insurers. They are expected to continue to gain in significance, since developments in supervisory law such as Solvency II are likely to give a further boost to their popularity.

 

Munich Re sees capital-market-based insurance solutions as a useful complement to traditional reinsurance. Clients therefore benefit from the neutral consultancy they receive when it comes to employing capital-market products for individual risks. By combining its capital-market and reinsurance expertise, Munich Re develops integrated solutions that are tailored to the client’s risk management.

To give our clients the best support we can, Munich Re supplies all-round service in the realm of ILS, ranging from analysing reinsurance programmes in terms of their capital-market-suitability to the complete structuring and placing process involved in a capital-market transaction. As an ILS service provider with risk capacity of our own, we are also in a position to supplement standard capital-market products with traditional reinsurance elements, thereby optimising the product range for our clients.

Product and services

Risk transfer of catastrophe risks
Cat bonds
Cat swaps
Risk swaps
Risk transfer of life risks
Extreme mortality bonds
Value-in-force securitisation


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This publication is available exclusively to Munich Re clients. Please contact your Client Manager.