Hannover Re and Munich Re are reportedly planning to form an alternative investment joint-venture to increase the diversification of a combined private equity portfolio.

The new joint venture (JV), which is due to receive regulatory approvals, is expected to have better terms and conditions on new investments.

Reinsurance News reported the reports of an alternative investment JV between Henchoz and global reinsurer Munich Re has been confirmed by Hannover Re CEO Jean-Jacques Henchoz.

Henchoz said the joint-venture is planned to be launched in the fourth-quarter of 2022, subject to outstanding regulatory approvals.

“The intent is really to provide, particularly as I mentioned, our private equity portfolios, as you know that is historically a growing portfolio in our book; it’s quite diversified across regions, currencies and industries, etc.

“However, as we were looking into 2023 and going forward, also with respect to the new accounting standard IFRS 9, which forces us to evaluate those investments through the PML, we’ve tried to find ways to reduce volatility, future volatility in the valuation of those portfolios,” Henchoz added.

Hannover Re, which transacts all lines of property & casualty and life & health reinsurance, has gross premium of over €27bn.

Munich Re is engaged in providing reinsurance, primary insurance, and insurance-related risk solutions. It comprises reinsurance and ERGO business segments, as well as the asset manager MEAG.

Last month, Munich Re acquired application programming interface (API)-focused insurtech apinity, which provides solutions in the form of Software as a Service (SaaS) for the insurance industry’s entire ecosystem.