“I was recognised for my work on educating investors about ILS and helping to bring about its acceptance as an asset class as it evolved into a truly alternative source of reinsurance capital.”
Name:
Company: Swiss Re Capital Markets Job:
Judith Klugman Managing director
Timeline: 1999—Managing director, Swiss Re Capital Markets
Judith Klugman has worked for Swiss Re Capital Markets Corporation in New York for more than 15 years and is currently head of global insurance-linked securities (ILS) sales. A pioneer of the sector, she believes that the ILS market can seek to grow within the perils it already covers and does not necessarily need to seek new risks yet.
Why did you choose to work in this industry initially? When I joined Swiss Re 16 years ago the asset class was in its infancy. Previously, I worked on the structuring side of investment banking, and I didn’t really know what this industry was all about. I’d always wanted to go into pure sales and the position at Swiss Re was a wonderful opportunity to get in on the ground floor of a developing asset class. At the time it wasn’t clear if it was going to take off or not, but it looked exciting and gave me the chance to do something on a more holistic level that was purely sales-related.
What has been the highlight of your career so far? Two years ago, the industry publication Trading Risk presented me with the Outstanding Contributor Award for asset class. It was a wonderful recognition among my peers—both competitors and investors—for the contributions I had made over the past decade. I was recognised for my work on educating investors about ILS and helping to bring about its acceptance as an asset class as it evolved into a truly alternative source of reinsurance capital. Historically, this award is given to an individual who’s made an outstanding contribution to the sector over the past year and consistently aids its development from an early stage. I was honoured to have been recommended by the Trading Risk publishing editor and to be presented with this award in 2013.
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Another highlight of my career occurred several years ago. For the previous decade, what I tried to do more than anything was to gain acceptance for this asset class—by investors and insurers. At that time we were the only ones doing cat bonds—we really were on the cutting edge. I knew we had come a long way when The Wall Street Journal profiled one of my investors in their special features section. I was incredibly proud of this investor. We finally received recognition that we had made it.
What has been the biggest challenge you have
encountered? My greatest challenge was getting investors to understand the right framework to recognise the underlying risk of the bonds so that they could price it correctly. They couldn’t put a price on the bond if they didn’t know how much risk they were taking. And they weren’t necessarily going to take some third party’s opinion. It was a lot of education to get investors comfortable with how to look at insurance risk and how it’s analysed compared to the traditional credit work that they had been used to. In asset backed securitisations, investors are looking at a cash flow stream of an asset whereas the underlying risk in a catastrophe bond is in the actual liability and how you assess how much risk there is in that liability.
If you had chosen a different profession/career path, what would it have been? I really enjoy working with people and doing sales. If I wasn’t in an ILS role, I believe I would be working with people in another sales positon for a cause that I truly believed in. I can talk to people all day long—it’s what I do, and what I’m good at. I also believe it’s really important to believe in what you’re selling and to be passionate about it. I think that makes you credible.
2015 | INTELLIGENT INSURER | 59
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