Swiss Re Insurance-Linked Fund Management

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Aspen now has $100m in third-party reinsurance capital vehicles


Global insurance and reinsurance firm Aspen now manages $100m of assets within third-party reinsurance capital vehicles at its alternative capital management and insurance-linked securities (ILS) focused unit Aspen Capital Markets.

When Aspen Capital Markets launched its first sidecar Silverton Re in December, the firm said that it had $65m of assets under management, with almost $50m sourced from third-party investors and $15m from Aspen itself. The firms fourth-quarter earnings reflect this, with non-controlling interests detailed as $49.7m, so likely the capital from external investors in Silverton Re.

However, Aspen Capital Markets now manages $100m of capital within third-party vehicles, including Silverton Re, according to comments made by Aspen’s management during the firms fourth-quarter earnings call. During the call CEO of Aspen Chris O’Kane said that Aspen Capital Markets was “off to a great start” and that it added a new product offering to Aspen.

O’Kane elaborated; “We formed Aspen Capital Markets early in 2013 to help capitalise on opportunities and with the changing market. Through Silverton Re and other initiatives we now have $100 million in third-party capital vehicles.”

So Aspen would seem to have another third-party capital structure, in addition to its Silverton Re sidecar, which could have the additional $35m of capital in it. However, the fourth-quarter report which suggests that external investors still only contribute just under $50m to Aspen’s capital base would suggest that this other third-party capital is funded either by Aspen itself or is a private mandate which did not need to be reported as non-controlling.

Speculating, this could be a first fund launch for Aspen which the firm has capitalised itself to build a track record using the January renewals to deploy its own capital in it. Or it could be a private sidecar established for a single investor, taking a quote share of Aspen business.

The use of third-party capital is set to become an important part of Aspen’s business. O’Kane said; “This additional capacity combined with the strength of our client relationships, with a range of product offerings and local distribution, resulted in a very successful January 1 renewal season for Aspen Re.”

O’Kane explained that Aspen already feels the benefits of this third-party capital; “We’re able to grow our premiums while maintaining same level of exposure by utilizing our relationships with third-party capital, as well as taking advantage of less expensive retrocession.”

So Aspen looks set to continue building out its third-party reinsurance capital management platform and will no doubt look to raise additional capital from external investors over the course of 2014. It’s to be expected that Aspen Capital Markets will eventually have ILS and reinsurance funds to complement its Silverton Re sidecar and it’s possible that the additional capital is a precursor to full marketing of a broader offering to investors.

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