Hannover Re is creating an ILS platform with operations in Bermuda, sources have told this publication.
Aaron Garcia, formerly head of investments at Hiscox ILS, has been hired for a senior role at the unit.
Garcia had spent over eight years at Hiscox ILS, joining as a portfolio manager in 2017, according to his Linkedin profile.
It is not yet known what strategies the ILS offering will include, in terms of whether it will write outbound business or focus on quota sharing risk.
Hannover Re already runs a major quota share sidecar, its K vehicle, which has been running since 1994 and raised $735mn this year.
However, the vehicle is operated more as a traditional retro agreement and investors typically include ILS firms and multi-strategy investors with expertise in the sector.
Any move to set up a formal ILS manager infrastructure could help broaden the investor base for quota share risks to those looking for a fiduciary manager, similar to steps taken by Swiss Re over the past few years to create asset management frameworks.
The German reinsurer also has a small Leine cat bond fund, with around $315mn in AuM. It put in $150mn of its own capital to launch the fund in 2012 and opened it to third-party capital in 2013.
Also, Hannover Re offers fronting services to ILS managers, and is one of just two major fronting reinsurers serving independent firms alongside Arch, after the withdrawal of Allianz Risk Transfer from this market in 2024.
Some sources suggested that the ILS launch could be a source of friction for its fronting business, due to the firm stepping into competition with its fronting clients for mandates whilst having visibility into their underwriting deals.
It would raise the need to have strong internal walls between the divisions.
This was a concern for firms using Tokio Millenium Re’s fronting services when it was taken over by RenaissanceRe, although RenRe then closed down this unit, with some of the fronting staff later moving to Arch.
Hannover Re wrote EUR5.4bn ($5.6bn) of fronted limit in 2024, according to its last full-year report.
Hannover Re declined to comment. Hiscox Re & ILS did not respond to requests for comment.
Additional reporting Rachel Dalton.