Swiss Re has opened a new capital markets unit in Luxembourg, Swiss Re Capital Markets Europe, S.A., to ensure continuity of service for its derivative contracts 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 will 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 last 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.
In 2018, Swiss Re CEO Christian Mumenthaler said 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 fast approaching, 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 companies have decided to move their European headquarters to the country in preparation for Brexit in 2018.