Securis Investment Partners' life team has won InsuranceERM's Alternative capital deal-maker of the year for an incredible fifth year in a row. The team has been recognised yet again by our judges for its non-stop innovation in the life and health insurance-linked securities (ILS) space.
Over the years, the team has pioneered transactions to transfer longevity, mortality and lapse risks to capital markets investors, as well as create ground-breaking commission financing and regulatory capital relief solutions for life insurers.
In 2020, Securis completed a novel transaction that funded costs in the life insurance value chain. The details are protected by a client confidentiality agreement, but the deal effectively creates an attractive financing structure to support the growth of the counterparty. In line with Securis's investment guidelines (targeting truly uncorrelated risks and aiming to eliminate any credit risk) investors are exposed to actuarial risks, mainly remote lapse and remote mortality.
Of course, Covid-19 has been another dominant theme for the firm during 2020.
"Pandemic risk was very much neglected in the past and, with the exclusion of developing countries, considered mostly a theoretical risk. Recent events have changed this," says Luca Tres, the firm's partner leading life origination and structuring globally.
Securis has previous experience of structuring pandemic risk transfer deals and has dealt with a surge in enquiries about transferring extreme mortality risk. Although the vast majority of these were simply not attractive enough, there is clearly a sign that extreme mortality risk will attract more attention in the capital markets community. The notional size of this risk is enormous and it is a challenging one for traditional reinsurance to address.
"Reinsurance is built on the ability to diversify risk, but as we have seen, it's difficult to diversify pandemic risk by geography. This means risk limits for reinsurers will be too low to make a difference to this global challenge," he says.
"Some people believe pandemics are uninsurable, but they can be insured if capital markets investors become involved and there are public-private partnerships to create risk pools. Governments will need to provide a backstop and there are already various initiatives at different stages on this front."
Tres adds: "We should remember that the ILS market was initially created to take down peak risks -typically on the catastrophe side - that were simply too large for the traditional players. What big risks are there right now? Clearly pandemic risk is one of them."
