Swiss Re has set up a new capital markets unit in Luxembourg to ensure continuity of service for its derivative contracts after the UK leaves the European Union.
Swiss Re Capital Markets Europe, S.A. was established by the reinsurer’s commercial risks division, Swiss Re Corporate Solutions, to ensure that the company can continue to transact with trading partners in Europe following Brexit.
The unit will focus on the weather and energy risk transfer space, in which Swiss Re uses financial derivatives to service its corporate clients and facilitate its weather hedging needs.
It will also provide continuity for Swiss Re’s insurance-linked securities (ILS) operations, where derivatives can be utilised in transactions which are then fully collateralised and backed by third-party investor capital.
Stuart Brown has been appointed to lead the new unit in addition to his current responsibilities as Head of Origination, Weather & Energy EMEA Asia-Pacific for the Corporate Solutions division.
Brown has spent the previous nine years leading the Corporate Solutions sales team for weather derivatives and other insurance protection products, with a particular focus on the needs of the energy markets.
Swiss Re CEO Christian Mumenthaler said last year that the company was “not afraid” of the effects that Brexit may have on the economy or Swiss Re’s ability to do business.
However, with the outcome of Brexit negotiations still unclear and the March 2019 deadline approaching fast, establishing a European hub in Luxembourg will provide Swiss Re with a stable base from which to transact sophisticated financial instruments such as derivatives and ILS.
Luxembourg for Finance recently reported that a total of 11 new global insurance and reinsurance company decided to move their European headquarters to the country in preparation for Brexit in 2018.
