Schroders Capital , the private markets business of asset manager Schroders , has added tokenisation to its insurance-linked securities (ILS) platform, making the rollout “the first real-world collateralised reinsurance transaction using the platform.”
The initiative has been developed by Schroders Capital’s private debt and credit alternatives team in partnership with reinsurance company Hannover Re.
This uses tokenisation to digitise the collateral behind reinsurance deals, allowing asset control and cash flows to be managed more efficiently. It also includes money market exposure as part of how the collateral is managed.
Smart contracts automate processes that have traditionally relied on manual, paper-based systems, helping to streamline execution and administration. The platform is designed to improve transparency and access for participants, while enabling Schroders’ ILS funds to invest in digital versions of reinsurance agreements.
Schroders Capital said the tokenised model is designed to support faster transaction processing and settlement through a digital infrastructure.
Flavio Matter, head of ILS, Schroders Capital, said: “Tokenising reinsurance contracts is a key step to streamlining the ILS market and enhancing its operational efficiency. This launch builds on our successful tokenised ILS pilot and will introduce greater transparency, liquidity and scalability to this part of the reinsurance market.”
Dirk Heuer, director, group protection, Hannover Re, said: “This tokenised transaction provided an opportunity to deepen our understanding of blockchain technology and its application within the reinsurance and retrocession markets. Supported by governance frameworks and compliance mechanisms, the deal demonstrated that the associated regulatory and operational risks are comparable to those encountered in traditional market transactions. Although blockchain remains an emerging technology, we expect an increasing appetite for blockchain-enabled structures.”
