Swiss Re Insurance-Linked Fund Management

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AIG reports AlphaCat assets stable at $3.3bn. Income suggests post-Ian recovery


AlphaCat Managers, the insurance-linked securities (ILS) and collateralized reinsurance investment manager operated by global insurance giant AIG, maintained a stable level of assets under management (AuM) at $3.3 billion at the end of 2022, while there are also signs of some recovery after hurricane Ian.

alphacat-managers-logoThe last time we reported on AlphaCat Managers, the ILS fund strategies and reinsurance sidecars it operates had seen their assets under management (AuM) fall from $3.4 billion to $3.3 billion, as of September 30th 2022.

Of that $3.3 billion, the third-party investor portion was reported at $3.2 billion at the end of Q3 2022.

Now, as of December 31st 2022, it appears that AIG has replenished AlphaCat’s strategies with another $100 million of its own capital.

This allows AIG to maintain its share of the ILS strategies at the $200 million that it had allocated to them through recent years, as the third-party capital portion is now reported as slightly down at $3.1 billion.

However, the bigger story is in the income that AIG reports it had earned from the AlphaCat activities during the final quarter of 2022, as these suggest a recovery in certain asset valuations before the end of the year.

Having reported that the direct investment losses associated with AlphaCat’s ILS investment strategies had reached $26 million for the third-quarter of the year, the fourth-quarter income disclosure suggests a relatively significant recovery.

For Q4 2022, AIG reported that income earned from asset management activities undertaken by AlphaCat Managers reached $21 million, the highest by a long way in over a year.

Which breaks down into $5 million of management fees, while the direct investment income AIG earned for Q4 2022 from the AlphaCat ILS activities has been reported as a positive $16 million, a much higher figure than reported in a typical loss free period.

It is reasonable to suspect that this perhaps record high quarterly investment income earned figure, reported by AIG from the AlphaCat ILS operation, are due to recoveries in values to certain positions that had been marked down for possible losses from hurricane Ian.

Hence, it appears that AIG’s AlphaCat Managers ILS operation has had a similar experience to many other ILS fund managers, having marked its book heavily for the losses anticipated from hurricane Ian at first, but then been able to recover some of that as loss estimates from cedents and counterparties came in lower than had been expected towards the end of last year.

View details of dedicated ILS fund managers and reinsurers offering ILS-style investment opportunities in our Insurance-Linked Securities Investment Managers & Funds Directory.

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