Credit Suisse pension restructures CHF 357m of ILS, reveals Humboldt Re costs

Credit Suisse pension restructures CHF 357m of ILS, reveals Humboldt Re costs

The Pension Fund of Credit Suisse Group reported that it is reorganizing CHF 357.1 countless insurance-linked securities (ILS) investments and revealed an exposure to the running-off of rated reinsurance business Humboldt Re.The pension fund stated in its 2020 yearly report that its Investment Committee has actually decided to restructure financial investments in insurance-linked securities (ILS) with an overall value of CHF 357.1 million (around US $388m).
It appears that a motorist of this is the shuttering and running-off of the Humboldt Re reinsurance business based in Guernsey, which as we reported at the time was being shut down due to strategic choices taken by the ultimate institutional investors behind it.
It appears the Credit Suisse pension fund was one of those institutional financiers that had actually supported Humboldt Re.
Humboldt Re was backed by capital from some of the insurance-linked securities (ILS) funds managed by Credit Suisse Asset Management (CSAM).
The Credit Suisse pension fund described that, “The existing contracts with Humboldt Re will be settled in an organized way by means of run-off and no new business will be generated.”
Nevertheless, it likewise revealed that, “As of 2021, Humboldt Re will no longer create earnings from new organization, although running expenses for employees, systems, and services for continuous settlement will still be incurred. These costs are approximated at CHF 20 million to CHF 25 million.”
So while the reinsurance agreements will run-off as experience enables, there will be a minor drag on the pension funds allocation due to these costs and costs.
The pension fund report likewise stated that, “At the exact same time, a process to try and sell Humboldt Re en bloc is underway.”
As a going concern, Humboldt Re might make an attractive start-up platform for a new reinsurance entity, or an ILS fund management operation trying to find a rated reinsurance underwriting vehicle.

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