LGT’s Lumen Re gets equity investor, names Sapelza CUO & Spescha COO

Lumen Re, the main reinsurance underwriting vehicle of LGT ILS Partners, the specialist dedicated insurance-linked securities (ILS) investments unit of the private bank and asset manager LGT Capital Partners, has taken onboard an external equity investor and named two senior appointments as it continues to build-out its platform.

LGT ILS Partners launched Lumen Re as a Bermuda-based Class 3A rated reinsurance company at the end of 2017, securing a balance-sheet platform for its insurance-linked securities (ILS) investment team, through which the majority of its reinsurance business is now underwritten.

Lumen Re is used by LGT ILS Partners as a platform that combines the best of both world’s for the asset manager, offering a rated reinsurance company to front counterparties of the LGT ILS fund management business, while holding onto the fully-collateralized vision of ILS at the same time.

Today, LGT Capital Partners has announced that US-based investor, The Kresge Foundation, has become an external equity investor in its reinsurance company, Lumen Re.

The equity investment in Lumen Re has been structured as a co-investment alongside the Princely Family of Liechtenstein, which acts as key equity investor in the reinsurer.

LGT Capital Partners said that, “this direct equity investment in Lumen Re allows for the most efficient allocation to insurance-linked strategies (ILS) for any long-term investor.”

“After several years with increased catastrophe event activity, the ILS market has undergone a fundamental shift, with improved rates and conditions.

“We saw this as an attractive entry point for a long-term ILS allocation through a uniquely-structured investment in Lumen Re with LGT Capital Partners, a firm that we view as a high quality partner,” explained Adrian Ohmer, Investment Director and Head of Diversifying Strategies of the Kresge Foundation.

The move is not surprising, as Michael Stahel, Partner and Portfolio Manager at LGT ILS Partners, previously explained to Artemis during a video panel discussion that adding an equity investor to Lumen Re could be attractive for the company.

Stahel said at the time that this could present an attractive opportunity to equity focused investors, as well as providing increased options to LGT in how it “gears” the capital the reinsurer deploys.

This will be due to increased balance-sheet firepower, providing Lumen Re with the ability to write more and leverage off the equity tranche, alongside the collateralized investments made by LGT ILS Partners’ fund strategies.

Roberto Paganoni, CEO of LGT Capital Partners commented on the new equity investment, “We welcome The Kresge Foundation as a co-investor in Lumen Re and are excited to continue the build-out of Lumen Re’s balance sheet strength by leveraging our experience as a long-term investor in this asset class since 2005.”

LGT Capital Partners also announced a continued build-out of depth and expertise at Lumen Re today.

Long-term employees and ILS specialists have been affirmed to two key roles at the reinsurer, with Klaus Sapelza named Chief Underwriting Officer and Mario Spescha named Chief Operations Officer at Lumen Re in Bermuda.

Both were already part of the ILS team at LGT Capital Partners in Switzerland, so have an in-depth appreciation of the strategies employed and how Lumen Re’s balance-sheet benefits the overall investment management operation.