Only modest YTD losses shared with Alternative Capital Partners’ investors: Swiss Re CFO

Year-to-date, only modest amounts of catastrophe losses would be shared with the investors backing reinsurance firm Swiss Re’s Alternative Capital Partners (ACP) division, as the third-party capital unit is more geared to larger tail-risk events, the firm’s Group CFO John Dacey explained today.

This morning, Swiss Re reported its third-quarter 2024 results, revealing that Q3 large natural catastrophe losses reached $743 million, which dominated the year-to-date large loss total of $813 million.

In addition, the reinsurance company also disclosed that it currently estimates that hurricane Milton losses are expected to fall below $300 million in the fourth-quarter.

Speaking during an analyst call to discuss the results this afternoon, John Dacey, Group Chief Financial Officer, Swiss Re, explained that of the large catastrophe losses experienced this year, only a modest amount would be shared with investors backing its reinsurance sidecars and other Alternative Capital Partners (ACP) structures.

“The participation of our sidecars and other protection coming through the Alternative Capital Partners, is skewed towards true tail-risks,” Dacey explained.

Adding that, “With the experience that we’ve seen to-date, I don’t expect there’s much to be shared, some, but pretty modest amounts.”

Dacey went on to say that, “Again, there was no individual event in the third-quarter that was above $150 million loss for the Swiss Re P&C business.

“Collectively, Helene between CorSo and P&C, got closer to $200 million with some of the flooding losses had on top.”

The CFO then further explained that, “In a true, or a very large catastrophe, especially one related to North American windstorm, up to 25% of the loss would be shared with our investors in the retro space.”

So, it seems likely a share of losses from hurricanes Helene and Milton may flow to investors that back Swiss Re’s reinsurance sidecar structures and other relevant Alternative Capital Partners (ACP) vehicles, which might be anticipated for these being the largest US hurricane events of the year.

Which is precisely how these third-party capital backed structures would be anticipated to respond. But, it also seems likely, these would still be expected to be only modest in size of losses shared, given the size of the reported events are manageable for a reinsurer of the global scale of Swiss Re.