Alternative Market Briefing

Insurance-linked securities provide a new uncorrelated investment opportunity

Wednesday, April 18, 2012

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Dr. Hans Peter Boller Bailey McCann, Opalesque New York:

Dr. Hans Peter Boller is a Swiss-based actuary who has spent the entirety of his professional life working in the insurance/re-insurance industry. Five years ago Dr. Boller launched Secquaero, a Swiss, specialist manager for insurance linked securities. He was recently interviewed by Matthias Knab for Opalesque TV.

Insurance-linked securities are securities or assets that transform insurance risk into capital markets. According to Dr. Boller, these securities can take many forms, "it could be in bond format, it could be as a derivative, it could be as collateralized reinsurance. In essence, it is any type of format that transfers the underlying insurance risk into an instrument that can be bought by an investor in the capital markets."

The most well known version of insurance-linked securities are catastrophe bonds which securitize the risk of natural disasters. Because of their uniqueness, they are largely uncorrelated to other markets, prices remain stable over time and volatility remains low as they are not directly linked to market events.

Secquaero looks at the full universe of possible risk including options like catastrophe bonds, aviation risk, life insurance and works to be diversified through all types of risk. Dr. Boller notes that in order for this diversification to be profitable, his team must actively manage ris......................

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