The establishment of the first French domiciled collateralised reinsurance sidecar vehicle by state-backed CCR Re, supports the reinsurer’s ambitions to expand and diversify its catastrophe portfolio, according to Bertrand Labilloy, CEO of CCR Re.
Launched at the end of March, 2019, 157 Re will assume a 25% quota share of the reinsurer’s global property catastrophe portfolio, providing CCR Re with a source of collateralised retrocessional reinsurance.
Following the historic inception of the first French domiciled reinsurance sidecar vehicle, Reinsurance News spoke with CCR Re’s Bertrand Labilloy and Mathieu Halm.
“The interesting thing about the sidecar for CCR Re, in terms of our long-term strategy and business plan, is that we want to grow and diversify our cat portfolio, our cat exposure, which is for the time being more or less concentrated on Northern Europe risks,” said Halm, Senior Vice President (SVP), Retrocession & Strategy.
Ultimately, he continued, the sidecar was setup to reach the objective of diversifying its portfolio gross of retrocession.
Currently, 157 Re will assume a 25% quota share, but this proportion could increase as the overall volume of business is expected to grow.
The sidecar vehicle is fully Solvency II compliant, and Labilloy explained that the fact the necessary legal framework had been in place for the last ten years, just not used until now, meant that “the process for regulatory approval was very short, around three months, maybe less.”
The launch of 157 Re required no change in law, with the vehicle utilising an existing French financial market structure of a mutual securitisation fund.
“So, what we needed is just confirmation of the possibility to apply it for insurance risk securitisation, and so we needed confirmation of the tax treatment for investors. And, we received those two confirmations without any difficulty,” he continued.
Like the large majority, if not all of the insurance and reinsurance universe, Halm believes alternative capital is part of the landscape for the long-term, driven in part by its use as a retrocession tool by traditional players.
“It’s very, very flexible, and it’s an interesting way to finance growth,” he said.
As well as diversification purposes, Labilloy explained that the launch of 157 Re helps to “plant the seed for the development of ILS in Paris.”
The French government recently said the launch of 157 Re shows “the innovative capacity of French financial institutions,” adding that utilisation of this sidecar could attract new investment into France, while offering a growth avenue for re/insurers.