Global insurance and reinsurance group Everest Re made increased use of its Mt. Logan Re Ltd. collateralized reinsurance sidecar-like vehicle in the first-quarter of 2020, with premiums ceded to the structure rising 38% year-on-year.
The acceleration in terms of premiums being ceded to third-party reinsurance capital investors through the Mt. Logan Re segregated account and sidecar-like vehicle, follows a year of growth in 2019 when Everest Re ceded the highest amount of annual premiums written to the structure.
The growth continued at the January 2020 reinsurance renewals it seems and Everest Re has reported ceding more than $110 million of premiums to Mt. Logan Re during the first-quarter of this year.
Which is around 38% up on the $80 million ceded to Mt. Logan Re in the prior year period.
Ceded earned premiums were up even more, as Everest Re reported this figure as being almost $90.6 million for Q1 2020, up by almost 60% on the prior year periods $56.7 million.
At the same time as building an enlarged book of business within Mt. Logan Re’s segregated cells for the vehicles third-party investors, the amount of losses ceded losses and loss adjustment expenses passed on by Everest Re remained level with the prior year at $45.1 million for Q1.
The growth in premiums ceded by Everest Re to its Mt. Logan Re structure continues to demonstrate the increasingly core nature of third-party capital within the Everest Re Group operations.
This is also evidenced by the vital role Mt. Logan Re plays within the reinsurers’ own retrocession, as some $686.9 million, or 38.0%, of Everest Re’s reinsurance receivables are attributed to the Mt. Logan Re collateralized segregated accounts as of March 31st 2020.
This drives home the significant amount of business that Everest Re cedes to Mt. Logan Re, as well as the core role the structure pays in bringing efficient capital into its business that would respond as retrocession to major catastrophe losses.
In the current climate, investors may be looking to vehicles such as Mt. Logan Re as a way to align themselves with well-regarded insurance and reinsurance underwriting operations. As a result, ILS vehicles operated by top-tier reinsurers, such as Everest Re, are likely to garner favour over the months to come.
The company recently explained that Mt. Logan Re remains a “very important hedging mechanism” for Everest Re, with its AuM relatively flat into 2020.