General Re Securities is planning to target the institutional investor market for the first time and plans to offer insurance derivatives, structured credit products and guaranteed funds by the end of the first quarter. The move represents a volte-face for the former General Re Financial Products both because it has long targeted derivatives players in the interbank market, and because early last year it was said to be on the verge of being sold (DW, 1/24). It will still market to banks. Kevin Lecocq, global head of marketing and structuring in London, said the boutique has been re-staffing and is using this as an opportunity to pursue this new client base. It is looking at products in which it has expertise and in which it has seen potential client demand.
Gen Re Securities may find it hard to compete on the distribution side, according to Antonio Caçorino, head of European derivatives marketing and structuring at Schroder Salomon Smith Barney in London.
Lecocq replied that it is hiring derivatives pros with experience selling to investors and it will also use third-party distribution. He added that in structured transactions most of the fees are in the structuring side so it need not always go after the distribution fees as well.
Caçorino added that the firm's strength will be its ability to measure and price risk differently from banks, especially for credit derivatives products. Credit derivatives have digital event risk, which is the traditional domain of a reinsurer. An insurance derivatives pro in London noted that General Re Securities' credit rating and insurance expertise provide it with a real edge in that market.
The new departments will focus on structured products. Each should have approximately eight derivatives professionals, half of which have yet to be recruited. The products will be offered globally and the heads of each department will report to Lecocq.
