Global insurance and reinsurance firm Aspen said that its alternative capital management and insurance-linked securities (ILS) focused unit, Aspen Capital Markets, has renewed its Silverton Re collateralized reinsurance sidecar for 2015, with $85m of capital.
Aspen originally launched the Silverton Re fully-collateralized sidecar, a Bermuda domiciled special purpose insurance vehicle, in December 2013 with $50m of third-party reinsurance capital and $15m of capital from Aspen, taking it to $65m in size. Silverton is designed to provide additional, third-party sourced, collateralized capacity for Aspen Re’s global reinsurance business.
For 2015 an additional $20m of third-party investor capital has been raised for Silverton Re, taking the sidecar to $85m in size, made up of $70m of third-party capital with the remaining $15m still contributed by Aspen itself.
Aspen is clearly being cautious, in not raising too much additional capital, given the softened state of global property catastrophe rates. This is only a very slight upsizing and we’re sure Aspen could have raised much more capital had it wanted to, but is holding back to ensure returns can be managed and that the capital can be deployed into attractively priced business.
Silverton Re will enter into a quota share retrocession agreement with Aspen Bermuda Limited, through which Silverton Re will reinsure a proportionate share of Aspen Re’s globally diversified property catastrophe excess of loss portfolio. This enables the third-party investors to share in Aspen’s fortunes in property catastrophe renewals for 2015, by taking a slice across the diversified portfolio.
Stephen Postlewhite, CEO of reinsurance division Aspen Re, commented; “Our objective when we established Silverton Re was to partner with the capital markets so that we are able to provide investors with access to diversified natural catastrophe risk backed by the distribution, underwriting, analysis and research expertise of Aspen Re. We are pleased with the progress that we have made in developing strong partnerships with new investors.”
Aon Benfield Securities, Inc. acted as the placement agent for the renewal of the Silverton Re sidecar. The capital is being raised through the issuance of Series 2015-1 Participating Notes, which mature on September 18, 2017.
The Silverton Re sidecar was actually almost $80m in size by the end of Q3 2014, as we wrote at the time, the value of the long-term debt that Silverton issued to third-party investors rose to $64.5m which wass up 15% in the third-quarter.
Aspen is taking a slow and steady approach to its third-party reinsurance and ILS capital management, through Aspen Capital Markets. The unit had approximately $130m of third-party capital under management by the end of September 2014. Aspen is likely building relationships, while getting structures established, as it evaluates its opportunities to upsize the participation of third-party investors in its underwriting business.
For more on reinsurance sidecar investments view our list of collateralized reinsurance sidecars.