Hertelendy departs as Bernina Re shrinks underwriting team

Credit Suisse ILS-backed Bernina Re has let go of a number of staff following a strategic review that will see the Bermuda reinsurance platform simplify its underwriting strategy, sources told Trading Risk.  

The highest profile departure is Paul Hertelendy, who joined Credit Suisse ILS in 2018 to take up the new senior role of head of reinsurance investments, before moving over to Bernina Re as Zurich branch CEO in November 2019. He was previously CUO for specialty lines at Scor.

Andreas von Reitzenstein is also leaving the firm after moving to Bermuda to take up the role of CUO for North America, having worked at Credit Suisse ILS since 2011.

Meanwhile, Fergus Reynolds, who was due to take up a senior underwriting position at the firm after leaving his role as head of non-life origination at Securis last year, is now no longer moving to Bermuda for personal reasons and will not join the firm’s staff, although he will still provide consultancy services to Bernina Re.

Zurich-based underwriter Dalida Bachmann is also leaving the firm, having worked at Credit Suisse since 2015 before transferring to Bernina Re in late 2019.

Following the staff departures, Bernina Re’s underwriting efforts will now be led in the interim by CEO Christian Bieri, who will add the CUO role to his responsibilities.

Former Nephila analytics specialist David Ross is also expected to take on senior US underwriting responsibilities, having joined the firm as head of analytics. 

Underwriting strategy shift

The cuts to the team follow a rapid build out of the Bernina Re team in Bermuda over the past year as Credit Suisse ILS moved to separate its underwriting operations from the cat bond investment and portfolio management activities.

Sources suggest that the manager will ultimately look to obtain a credit rating for the Bernina Re vehicle, but that initial applications have not secured its targeted rating. However, it can already underwrite on rated paper via two Guernsey carriers, Humboldt Re and Kelvin Re.

Amid the restructure and Bermuda expansion, the ILS manager has grappled with a major decline in assets under management (AuM) in the post-Irma market – falling from $9bn at its peak in mid-2018, to $6.2bn as of March 2020.

From being the industry’s second-largest manager pre-Irma, it has slipped to fourth-largest now, and of the top five in 2017, its fall in AuM since January 2017 – at 17% – was outpaced only by Stone Ridge, down 20% over those three and a half years.

Both the shrinking fee base and the impact of major losses in past years are understood to have played into the underwriting review and staff cuts.

Moving ahead, Bernina Re has told brokers to expect a shift in its underwriting strategy as it prepares to refocus largely on catastrophe solutions and some short-tail lines, retrenching from more diversifying lines of traditional reinsurance business and rationalising the number of counterparties it reinsures.

It is understood it believes that this will better fit its role as an ILS provider and that it plans to look to put down larger lines for fewer key cedants.    

The firm had already been shifting away from higher-risk structures such as sidecars, in line with a general investor shift in favour of more remote liquid strategies.

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