Aspen Insurance Holdings has expanded its capital markets activities through its Peregrine Reinsurance Ltd. vehicle recently, utilising it for segregated account re/insurance deals for a broader range of risks, backed by third-party investors.
Aspen has a dedicated unit that operates as an insurance-linked securities (ILS) investment manager, Aspen Capital Markets. In recent months the unit had expanded its activities, adding Peregrine Re, a special purpose reinsurer Aspen first registered in 2013, to its offering.
Peregrine Re was registered as a Bermuda segregated accounts company in November 2016, in order to expand its use, and had three segregated accounts up and running by the end of the year, which were all funded by a third-party investor, providing exposure to a range of business underwritten by Aspen.
Aspen utilises Peregrine Re to provide investors with access to a broader range of risks than are accessible through its longer-standing Silverton Re collateralised reinsurance sidecar vehicle.
Silverton, which renewed for 2017 at $130 million in size, offers investors exposure to diversified property catastrophe risks through quota-shares entered into with reinsurer Aspen Re.
Peregrine however offers investors exposure to a broader range of risks that Aspen underwrites, including some property catastrophe risks, but also other property risks and specialty lines of insurance or reinsurance business.
It appears that Peregrine may be operating for a sole investor, by the way company disclosures are worded, capitalising the three segregated cells that were in use as of the end of 2016 in order to collateralize reinsurance portfolios of Aspen group risks, through transactions between Peregrine Re and group entities.
Outside of the two SPI’s, Aspen Capital Markets also helps investors to other collateralized reinsurance arrangements, leveraging the Aspen Re underwriting platform to create solutions for third-party investors.
Overall, the use of Silverton Re, Peregrine Re and the additional collateralized reinsurance transactions that Aspen Capital Markets works with third-party investors on, all help the Aspen group of re/insurance companies to reduce their exposure to peak catastrophe events on a managed basis.
With Peregrine also entering into transactions in specialty and other property lines of business, it looks like Aspen will also be able to manage its peak loss exposures in those areas of its book using third-party capital as well.
Aspen also sees the Capital Markets operations as a way to increase its operational flexibility in the capital markets, leverage its underwriting franchise and provide investors access to its underwriting expertise.
By expanding these with Peregrine Re and providing investors access to a broader range of risks, Aspen is more deeply integrating the capital markets within its reinsurance business.
The collateralized reinsurance capacity that Silverton, Peregrine and other third-party investor backed deals helps support Aspen Re’s global reinsurance business, while also offering the re/insurance group a way to bring fee income, from managing the capital, underwriting and claims services, into the group as additional.