More signs of the current attraction that third-party capital has for re/insurers in the news this morning as re/insurance group Allied World Assurance Company Holdings, AG announced its plans to grow its Allied World Financial Services platform by acquiring a minority stake in Aeolus Capital Management Ltd. Aeolus is a Bermuda-based asset manager who manage investors third-party capital to invest in property catastrophe reinsurance and retrocession on a collateralized basis.
As well as acquiring the stake, Allied World who are an existing quota share partner of Aeolus’, will increase the amount of capital they deploy in the reinsurance and retrocession markets through Aeolus. The deal will see Allied World extend their capital commitment to Aeolus for another three years from January 2013.
Scott Carmilani, President and CEO of Allied World, commented on the deal; “We have been working with the Aeolus team for some time in the collateralized reinsurance market and have great respect for their capabilities, expertise and track record. It is a very efficient way to consistently deliver optimal returns, and I firmly believe Aeolus’ platform for managing capital to be the property cat model of the future. We are excited about this partnership and how it will work to complement both entities’ overall portfolios and returns.”
John Gauthier, President of Allied World Financial Services, added; “This is the third transaction that we have announced since launching Allied World Financial Services Company earlier this Fall. The goal of Allied World Financial Services is to continue to minimize out-sourced expenses, increase expertise and participate in the economic returns of our partners. Aeolus is a highly attractive investment for us given its strong track record of managing collateralized reinsurance assets, the level of service it provides to its investors and cedents, and the highly experienced management team.”
Peter Appel, Chairman and CEO of Aeolus Capital, said; “In addition to providing Aeolus with a substantial, longer term capital commitment our cedents can rely on, this transaction allows us to bring into the fold a very knowledgeable and collaborative partner who can provide us with invaluable insight and additional resources as we continue to expand our presence in the property catastrophe market. Allied World’s strong commitment to Aeolus provides real validation of our overall approach to the reinsurance and retrocession market and will serve our investors and cedents well.”
Aeolus manages capital for investors through a number of different investment vehicles for anyone seeking to tap into the returns that property catastrophe reinsurance and retro can offer. Aeolus Capital’s assets under management have grown to over $1.7 billion, and since 2007, Aeolus and its predecessor have provided over $12 billion of capacity to its cedents, making them one of the longest surviving companies offering a third-party capital strategy in fully-collateralized reinsurance.