Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Investors in Brit’s Sussex Capital get 2022 income. Sussex funds Ki syndicate again


Third-party capital investors allocated to specialty insurance and reinsurance player Brit Ltd’s collateralised reinsurance underwriting vehicle and ILS fund brand Sussex Capital appear to have profited in 2022, as the company delivered positive income to them for the year.

brit-logoBrit’s main third-party capital vehicle sits under the Sussex Capital branding now, with collateralised reinsurance products underwritten, ILS fund structures managed, while it is also used to channel capital to its other underwriting vehicles from third-party investors including via a catastrophe bond the structure issued.

A year ago, Brit’s underwriting result, in terms of income attributable to third party capital providers but earned by Brit, came out at $2.5 million for 2021.

That suggested the investors in Sussex Capital faced some losses during 2021, a worsening of performance from 2020 when $6 million of income earned by Brit was shared with investors in the third-party capital structures.

But for 2022, the fortunes seem to have reversed again, as third-party investors took a gain from Brit related to Sussex Capital.

Brit said that it shared $1.3 million of Sussex Capital income with its third-party capital partners for 2022, suggesting positive income for the investors and a better underwriting experience for the structured reinsurance arrangements Sussex Capital enters into.

Also of note, Brit has again used its Sussex Capital structure to channel funding to its Ki algorithmic underwriting syndicate at Lloyd’s.

Ki Financial Ltd benefits from a letter of credit facility that delivers a share of the Funds at Lloyd’s for its Syndicate 1618 via a segregated account of Sussex Re.

For the 2021 underwriting year that amounted to a $50 million funding contribution to the Ki strategy, which then increased to $130 million for the 2022 underwriting year.

But, for 2023, the contribution to Ki’s underwriting resources that flow from the LoC via Sussex Capital has increased to $180 million, providing a proportion of the Funds at Lloyd’s for Syndicate 1618 through a segregated account of Sussex Re.

This shows Brit continuing to cleverly use its ILS vehicle in order to channel, what is presumably third-party capital sourced funding (bank or investor sourced) to another of its syndicate ventures, in particular the algorithmic underwriting venture Ki.

As a result, the use of third-party capital grows in importance, as too does the Sussex Capital platform and the capital markets infrastructure it has provided the company.

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