Thursday, August 28, 2014

Where Did the Gunslinger Prop Traders Go? (some of them ended up at insurance companies)

From Artemis:

Weather derivatives trading unit complements Munich Re: S&P
The world’s largest reinsurance firm Munich Re’s U.S. weather derivatives and energy commodities trading unit Munich Re Trading LLC complements the reinsurers core operations and is highly strategic to its parent, according to S&P.

Munich Re purchased the weather and weather-related energy risk management unit of Bermuda reinsurer RenaissanceRe, RenRe Energy Advisors Ltd., back in September 2013. Almost a year later the unit, now called Munich Re Trading LLC, has become strategic component of the reinsurance firm, complementing its expertise in weather and catastrophe risks.

Ratings agency Standard & Poor’s said in a report that Munich Re Trading LLC’s strong business position in the weather derivatives market is a complement to Munich Re’s product portfolio in the area of weather risks.

S&P said that Munich Re Trading holds “highly strategic group status” to its parent, reinsurer Munich Re. Its business involves selling corporate clients which are weather sensitive, such as utilities, risk management products to mitigate the effects of weather events and variation.

This is achieved predominantly with the use of derivative contracts utilised to mitigate the economic impact of noncatastrophic weather events as well as weather-linked commodity price variations.

These activities are likely a strong complement to Munich Re’s increasing focus on providing specialist, customised reinsurance covers for large corporate clients, which is a key strategic aim for the reinsurer as it navigates the challenging reinsurance price environment....MORE