Schroders Capital and Hannover Re have completed the first tokenised collateralised reinsurance transaction.
It comes as insurers increasingly seek alternative capital and more efficient infrastructure for insurance-linked securities (ILS) investments.
Flavio Matter, head of insurance-linked securities at Schroders Capital, said tokenising reinsurance contracts could streamline the market and improve efficiency. “Tokenising reinsurance contracts is a key step to streamlining the ILS market and enhancing its operational efficiency,” he said. “This launch builds on our successful tokenised ILS pilot and will introduce greater transparency, liquidity and scalability to this part of the reinsurance market.”
The transaction, based in Guernsey, used USDC stablecoin-denominated collateral that was transferred through a digital wallet and invested in a money market fund to generate yield while remaining linked to the reinsurance agreement.
Smart contracts were used to automate processes that have traditionally relied on paper documentation, trustees and other intermediaries, reducing administrative complexity and settlement times.
The deal forms part of a new tokenised capability integrated into Schroders Capital’s ILS investment platform in partnership with global reinsurer Hannover Re. The companies said the approach digitises the control and flow of assets within reinsurance contracts while improving accessibility and transparency.
Aon Guernsey managed the reinsurance entity and helped secure regulatory approval and governance oversight for the structure.
The transaction builds on Guernsey’s track record in blockchain-based insurance structures, including a digitised insurance-linked notes issuance in 2017 and a blockchain-enabled humanitarian catastrophe bond in 2021.
The launch comes against a backdrop of rapid growth in the ILS sector. Alternative reinsurance capital reached a record US$136 billion at the end of 2025, growing 18% year on year, while Schroders has said tokenisation could help modernise a market worth about US$130 billion.
Market participants increasingly view tokenisation as a practical operational tool rather than an experimental technology, creating new opportunities for specialist jurisdictions such as Guernsey.
