AXIS Capital lifts third-party capital assets managed to $2.1 billion

Bermuda headquartered insurance and reinsurance firm AXIS Capital Holdings Limited has lifted the amount of third-party capital assets under its management to a new high at $2.1 billion.

AXIS Capital’s third-party capital management business has continued to steadily build, with the insurance and reinsurance firm using an increasing amount of quota share capacity from third-party institutional investors, as well as capital accessed through other private ILS deals.

In the last quarter, AXIS Capital’s fee income earned from its so-called strategic capital partners rose as well, indicative of having higher funds under management, as the firms total strategic capital partner fee income reached almost $19.2 million for the second-quarter of 2019, up from just under $11.4 million in the prior year.

Alongside this the amount of premiums AXIS is ceding to third-party capital also increased, to $558.6 million of premiums for the first-half of the year, up from $452 million ceded to third-party capital in H1 2018.

Part of the expansion has been the launch and growth of AXIS Capital’s latest collateralized reinsurance sidecar vehicle, Alturas Re, which has so far made three issuances in 2019, a $55 million cession of primary insurance property risk and a $75 million retroceding of reinsurance risks to investors both in Q1, as well as an additional $39 million issue in June.

Given the expansion of third-party capital, particularly insurance-linked securities (ILS) related activities at AXIS, it’s no surprise to learn that the firms strategic capital partner assets under management (AuM) reached a new high at $2.1 billion as of July 2019.

Within that $2.1 billion are included AXIS Capital’s third-party capitalised total-return reinsurance joint-venture Harrington Re,  its AXIS Ventures Reinsurance Limited unit where its insurance-linked securities (ILS) fund management activities take place, other private quota share and ILS deals with capital partners, and also the firm’s new Alturas Re reinsurance sidecar vehicle.

AXIS doesn’t break each down, but we’ve made an attempt to approximate how those assets under management are split across the vehicles.

We believe Harrington Re likely sits at somewhere around $950 million of the total, that AXIS Ventures Reinsurance Limited could be as much as $620 million, that other capital partner quota shares and private ILS deals make up around $360 million, while the Alturas Re sidecar is $169 million currently.

So that means approximately $1.15 billion of third-party investor assets under management in ILS funds, quota shares, reinsurance sidecars and other private ILS vehicles at AXIS Capital as of July 2019.

Thanks to this continued expansion, AXIS Capital reported that total fees earned from strategic capital partners hit almost $39 million in the first-half of 2019, well up on the $24.4 million from the prior year period.

Having only reported $48.5 million of strategic capital partner fee income for the full-year 2018, it seems AXIS Capital is well on-track to beat this figure in 2019.