Fiona Walden, vp, credit and financial lines at RenaissanceRe, answers SCI's questions

Q: How and when did RenaissanceRe became involved in the securitisation market?
A: We were set up 25 years ago as a property catastrophe company. We have a long track record of credit reinsurance for our insurance company clients. More recently, we applied this knowledge and expertise to structured credit transactions - including significant risk transfer transactions - by providing unfunded guarantees on a first or second loss basis to banking clients.

Q: How do you differentiate yourself from your competitors?
A: Our key focus is building long-standing partnerships in order to provide meaningful and long-term support to our clients. Through extensive due diligence and our understanding of the bank’s internal systems, we can use our underwriting expertise and our ability to create and adapt risk models to deliver simple, swift and effective solutions for our clients. We are one of only two reinsurers or insurers to have executed unfunded guarantees in SRT trades.

We take the time to understand our counterparty and our exposures, similar to funded investors. Overall, we want to provide support to our clients through the cycle rather than opportunistic involvement. Our underwriting expertise and superior risk modelling enable us to be confident with the risk that we assume.

Q: In your opinion, what are the major opportunities in the risk transfer market going forward?
A: We have a broad appetite and we are flexible in terms of asset class, sector and jurisdiction, since our goal - and one of our key strengths - is to most efficiently match risk with capital. One development that we are watching closely is the spread of the dual tranche technique. Given our flexibility, we are in a position to assume a thicker second or first loss piece, or engage in transactions with funded investors.

As the protection we provide is unfunded, we don’t require a return on any collateral. This enables us to have more flexibility, which we emphasise as part of our efforts to increase awareness over the usage of unfunded guarantees in SRT transactions. 

Stelios Papadopoulos