Schroders Capital introduces tokenised ILS

Each token represents a share in a portfolio of reinsurance contracts.

Schroders Capital launched a pilot tokenised insurance-linked securities (ILS), in collaboration with reinsurance company, Hannover Re. 

The company said the pilot successfully tokenised reinsurance contracts, enabling them to be traded on a public blockchain using smart contracts. “The pilot further builds on Schroders Group’s commitment to innovation and leadership in digital assets, after having last year joined the Monetary Authority of Singapore’s Project Guardian, and participating in the first ever GBP Digital Bond issued by the European Investment Bank,” it added in the press release.

“This proof of concept was a great opportunity to understand the capabilities of blockchain technology when applied to the reinsurance market. With strong governance and embedded compliance in place, the pilot also showed that the regulatory and operational risks around blockchain are similar to those of other market transactions,” Henning Ludolphs, Managing Director Retrocession & Capital Markets, Hannover Re, said in a press release.

“While this is an emerging technology, we anticipate more appetite for blockchain-enabled investments in the future, and this pilot prepares us well to evolve our approach to generate further retrocession capacity via a different source.” Ludolphs added.

Each token represents a share in a portfolio of reinsurance contracts, streamlining the investment process and reducing settlement times. 

Key catastrophe insurance data integration ensures automatic payments to recipients following specific natural disasters.

This initiative aims to enhance transparency, automate processes, and improve client experiences by allowing tokens to be held in digital wallets. 

Earlier this year, Schroders Capital’s ILS team surpassed $5b in managed funds, reflecting growing client demand. 

This effort is part of Schroders Capital's broader Private Debt and Credit Alternatives (PDCA) business, which manages over $30b in assets.

Schroders Capital plans to explore further tokenisation opportunities in the reinsurance market, continuing its focus on innovation.