AlphaCat AuM rises to $3.7bn, while ILS fee income rises for AIG in Q1

American International Group’s (AIG) insurance-linked securities (ILS) and collateralized reinsurance investment manager entity, AlphaCat Managers, continued to grow its assets under management during the first-quarter of 2022, adding another $100 million to take it to $3.7 billion.

This came on the heels of another $100 million of growth in the final quarter of 2021, when the company lifted its ILS AuM to $3.6 billion.

Previously, insurance-linked securities (ILS) assets under management at AlphaCat Managers had reached $4.2 billion by the end of 2020, but then fell declined after catastrophes losses from US winter storms, hurricane Ida and the European flooding all contributing to a decline to $3.5 billion by the end of Q3 2021.

Since then, the ILS asset manager has now recovered with the addition of $200 million more in third-party capital, as AIG kept its own stake in the manager at $100 million.

With ILS assets under management rising and catastrophe loss activity lower over the last two quarters, AlphaCat Managers has been delivering higher fee income to its parent AIG.

Net investment income from the AlphaCat operations rose to $9 million for the first-quarter of 2022, for better than an investment loss of -$7 million reported a year earlier.

$5 million of the income earned by AIG from its AlphaCat ILS operations in Q1 2022 was from fee income related to these asset management activities. The other $4 million was profit on direct investment activities undertaken in the AlphaCat unit.

Fee income was slightly down on a year ago, which is likely due to the effect of performance fees still being a little reduced by prior period catastrophe loss events, something that should decline over the coming quarters and therefore see fee income rising for AIG, as long as major catastrophe losses remain more moderate through 2022.

AIG’s progress on underwriting in its General Insurance division may have a positive read-across for AlphaCat as well, as the company reported lower catastrophe losses and a much-improved combined ratio of 92.9% for Q1 2022, far better than the previous two years.

You can read more on AIG’s quarterly results over at our sister publication Reinsurance News.

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