CDC IXIS Capital Markets is setting up an alternative risk transfer desk to trade weather, catastrophe, life and automobile insurance risk. Michel Queruel, head of alternative risk structuring in Paris, said the bank is ready to trade weather risk via insurance and derivatives products, but it will take a couple of months to start trading the other types of risk.
Queruel said now is a good time to set up an ART desk because reinsurance has grown expensive over the last several years--there have been a number of natural disasters in Europe, for example, that have increased the number of claims. Reinsurers are looking to offload risk efficiently via the insurance or capital markets. The precise timing coincides with Queruel's arrival on Tuesday from Barep Asset Management, where he was head of weather and insurance funds.
Queruel said CDC IXIS Capital Markets is in a good position to offer these products because it is triple-A rated and has a network of clients it can educate in these products. The weather derivatives desk will start with customer flow business in plain vanilla and exotic temperature, rain and hail derivatives. It will then expand to market making in these products as the department grows.
