Global specialty insurance and reinsurance company Brit Ltd’s new open-ended collateralised reinsurance fund vehicle raised $102.5 million from investors for the 2018 underwriting year, which the firm called “the next step in Brit’s strategy to build long term relationships with the capital markets.”
Sussex Capital, an open-ended ILS fund that will underwrite its collateralised reinsurance business through special purpose insurance vehicle Sussex Re, will both write third-party business as well as take a share of risks that Brit underwrites already.
In this way Brit will use Sussex Capital to increase the efficiency of its own reinsurance protection, while also adding incremental underwriting opportunities as well, leveraging the capital market funding to put out bigger lines for clients, or to offer entirely new products.
Brit has now revealed how much capital the company has raised for its new Bermuda-domiciled collateralised reinsurance fund venture, saying in its results that Sussex Capital has been funded with $102.5 million for 2018.
It’s not clear at this time what percentage of that is third-party capital and what may be an injection of funds from Brit itself.
Matthew Wilson, Group Chief Executive Officer of Brit Limited, explained, “In December we launched a new Bermuda-domiciled collateralised reinsurance platform, Sussex Capital, with initial funding of US$102.5m. From 2018, Sussex Capital will write direct collateralised reinsurance while also providing collateralised reinsurance to Brit’s Syndicate 2987.
Wilson went ont to say that the launch of Sussex Capital, “strengthens Brit’s reinsurance capability”, while providing the re/insurer with access to a diversified source of capital from third-party investors, while at the same time enhancing Brit’s client and broker proposition.
Importantly Sussex Capital will add benefits for Brit in a number of ways. Providing an efficient source of reinsurance capacity, broadening its offering to clients and brokers, while also delivering income through fees for managing the third-party capital and a profit share when underwriting performance is positive.
CFO of Brit Mark Allan explained the importance of the firms third-party capital activities, saying, “Syndicate 2988, Versutus and Sussex are key to Brit’s strategy of building long term relationships with the capital markets, and through these platforms we now have access to over US$400m of capacity.
“The support they provide enables us to strengthen our reinsurance capability and manage our catastrophe risk exposures whilst offering capital market investors attractive, non-correlating returns.”
As we wrote earlier this week, Brit now has access to $400 million of additional capacity through its third-party capital vehicles, with the firms Versutus reinsurance sidecar growing 25% to $187 million in size for 2018.
Allan commented, “Our relationship with the Bermuda domiciled special purpose reinsurer Versutus Limited has continued to grow, with the amount of capital deployed to support Brit increasing to US$187.0m for 2018.”
These third-party capital activities are now beginning to gain greater scale for Brit and will make a meaningful input to income, as well as add reinsurance efficiency benefits in the future.
As Sussex Capital will act more like a managed fund for its investors, we have added the venture to our Directory of ILS fund Managers.