Aspen eyes further growth of Silverton Re sidecar in 2018

by Artemis on October 30, 2017

Insurer and reinsurer Aspen Insurance Holdings plans to grow the size of its Bermuda-based collateralized reinsurance sidecar, Silverton Re, so long as pricing in the global P&C industry reacts to recent catastrophe losses as the firm anticipates.

Since its launch in December 2013, Aspen has been slowly increasing the size of its Silverton Re sidecar vehicle, announcing at the end of 2016 that the sidecar had been renewed at $130 million by Aspen Re, the group’s international reinsurance arm.

Speaking during Aspen’s third-quarter 2017 earnings call, Aspen Chief Executive Officer (CEO), Chris O’Kane, noted a desire to increase the size of Silverton Re in the future, so long as pricing in the global reinsurance market increases on the back of the costliest third-quarter on record for global catastrophe losses.

“If our assumptions about pricing are correct then let me be clearer, we definitely want to grow the gross exposure, but you also have to think about capital and you have to think about risk, and you have to think about volatility,” said O’Kane.

Following the impacts of hurricanes Harvey, Irma, and Maria, and the two powerful Mexico earthquakes, many in the global reinsurance industry are hoping for significant rate increases at the upcoming January 1st, 2018 renewals season, O’Kane included.

“The vast majority of P&C lines in both insurance and reinsurance will see great increases,” said O’Kane, adding that catastrophe reinsurance will see the greatest increases, with retrocessional lines already seeing the highest increases.

And should rates increase as the firm expects, then it looks almost certain that Aspen will look to expand the size of its Silverton Re sidecar, which, according to O’Kane, has performed “in line with expectations.”

Aspen recently announced catastrophe losses for the third-quarter of $360 million from hurricanes Harvey, Irma, and Maria, with around 75% being assumed by its reinsurance segment, which suggests that Aspen Capital Markets third-party vehicles, which includes Silverton Re, are likely to take a share of this.

But despite any losses experienced within its insurance-linked securities (ILS) activities, O’Kane underlined the willingness of Silverton’s capital providers to grow their shares in 2018.

“We have good relations with the guys within Silverton and the other people whose capital we represent. Most of them, I think, would be willing to take increased shares next year and we may very well do that, it’s just a matter of commercial negotiation,” said O’Kane.

View details of and read about reinsurance sidecar launches and capital raises in our Directory here.

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