Swiss Re Insurance-Linked Fund Management

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AlphaCat raises $564m across ILS funds and 2015 sidecar


AlphaCat Managers Ltd., the insurance-linked securities, catastrophe bond and reinsurance linked investments arm of Bermuda based re/insurance group Validus Holdings has added $564m of new capital for deployment through 2015.

The new subscriptions and committed capital has been raised for deployment through AlphaCat’s range of ILS funds and a newly launched AlphaCat 2015 Ltd. collateralized reinsurance sidecar vehicle.

The capital raised breaks down as follows. $409m has been added to the AlphaCat ILS Funds and $155m for AlphaCat 2015 Ltd., a special purpose vehicle formed as a sidecar for to invest in collateralized reinsurance and retrocessional contracts underwritten by AlphaCat Reinsurance Ltd.

Validus maintains its process of keeping some interest in the vehicles through use of its own capital and third-party capital raised represents 95% and 82% of funds raised in respect of the AlphaCat ILS Funds and the AlphaCat 2015 sidecar, respectively.

As at the 1st of January AlphaCat has deployed 75% of the funds raised for the AlphaCat ILS funds and 92% of the AlphaCat 2015 sidecar capital raised. The rest of the capital will be deployed throughout 2015, likely at the other main renewal cycles.

With the addition of this successful new capital raise for 2015, taking into account AlphaCat vehicles in run-off, AlphaCat Managers has increased its total assets under management by around 12%, from $1.521 billion at the 30th June 2014 to approximately $1.7 billion.

Lixin Zeng, Chief Executive Officer of AlphaCat, commented on the successful closing of another capital raising; “We are pleased with the strong level of investor support for the AlphaCat business and continued success in growing assets under management. The increased size of AlphaCat reflects well on the strength of Validus’ underwriting platform, the skill of our analytical team and the infrastructure we have developed to manage third party capital.”

Validus Holdings continues to demonstrate the important role that third-party reinsurance capital and ILS plays at the firm, providing it with a diversified capital base and interests across insurance, reinsurance and ILS.

We would imagine that, as with many ILS managers at this point in time, AlphaCat could have raised much more capital if desired as investor interest in ILS remains high. However with the reinsurance market competitive and rates depressed ILS managers are typically only taking on the capital they need. AlphaCat demonstrates this discipline by having already deployed the majority of its funds at the January reinsurance renewals.

For more details on reinsurance sidecar vehicles and investments view our list of collateralized reinsurance sidecars.

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