The contribution made to insurance and reinsurance holding company Alleghany Corporation’s results by its investment and strategic partnership in insurance and reinsurance-linked ILS investment manager Pillar Capital has grown year on year.
Alleghany has a stake in Pillar Capital due to its acquisition of Transatlantic Holdings, so including the property and casualty reinsurer TransRe, in 2012. TransRe became a strategic partner in specialist ILS and reinsurance linked investment manager Pillar Capital later in 2012. Now Alleghany Corporation’s equity stake in the ILS manager is showing evidence of upping its returns, being up year on year for the first quarter.
In the first quarter of 2013 Alleghany reported investment income of $1.6m resulting from its equity stake in Pillar Capital Holdings Limited and its funds. For the first quarter of 2014 that contribution has more than doubled, with Alleghany reporting its equity stake in Pillar Capital provided it $3.9m of investment income.
For the full year of 2013 the firms stake in Pillar Capital provided it with $27.2m of investment income. Much of this was earned during the third and fourth quarters, perhaps reflecting the seasonality of many catastrophe line returns, so it will be interesting to see whether those figures can be matched in 2014, given the lower catastrophe reinsurance rate environment.
It’s a strong start to the year for the contribution though. This likely reflects the low catastrophe loss environment and we would assume an increased focus on collateralized reinsurance at Pillar Capital as it too looks to boost returns by focusing more on privately negotiated transactions.
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