Having launched its new $250 million Outrigger Re collateralized reinsurance sidecar at the end of 2022, White Mountains re/insurer subsidiary Ark is already benefiting, with the additional capital helping it to grow its premiums written in the attractive market environment.
White Mountains reported its first-quarter 2022 results today, with its CEO Manning Rountree explaining that, “Ark achieved a 94% combined ratio and, supported by increased reinsurance capacity from Outrigger Re, wrote $809 million of gross written premiums, up 28% year over year.”
White Mountains further demonstrated its appetite for deploying capital to insurance-linked securities (ILS) and reinsurance-linked investments in the last year, becoming the lead investor behind its subsidiary Ark Insurance Holdings’ $250 million collateralized reinsurance sidecar Outrigger Re Ltd.
The company also made a further investment of $100 million into funds managed by the ILS manager it holds a signfiicant investment in, Elementum Advisors, LLC.
The Outrigger Re sidecar investment is already delivering benefits, by helping sponsoring re/insurer Ark to write more risk in the currently attractive market environment, it seems.
With Outrigger Re assuming only global property catastrophe excess of loss reinsurance business from Ark, the sidecar has actually helped in moderating the combined ratio of this segment of White Mountains business as well.
While Ark reported a 94% combined ratio for Q1 2023, together with the Outrigger Re sidecar that falls to 92%, White Mountains said.
Together, Ark and Outrigger Re brought in gross written premiums of $809 million, net written premiums of $614 million and net earned premiums of $255 million for White Mountains in the first quarter of 2023.
Combined, Ark and White Mountains investment in Outrigger brought the company pre-tax income of $42 million for the period.
Ark itself experienced some unfavourable development related to winter Storm Elliott, amounting to $8.6 million and adding 3 points to its combined ratio.
But, in the first-quarter of 2023, the company reported “negligible catastrophe losses” and this is evident in the Outrigger Re sidecar’s very low combined ratio for the period.
White Mountains stake in Outrigger Re, which amounted to $205 million of the $250 million initial capitalisation of the sidecar structure, experienced a combined ratio of just 21% for the first quarter of 2023.
With a low combined ratio, the investors in Outrigger Re will thus far be feeling positive about the vehicles potential to deliver attractive returns, although with a long-way to go and the wind season ahead, positive performance is of course not guaranteed.
The share of the Outrigger Re sidecar that White Mountains reports for delivered gross and net written premiums of $44 million and net earned premiums of $5 million for Q1 2023, the company said.
It’s a strong start for the year for the Outrigger Re sidecar vehicle, helped by Ark avoiding major catastrophe loss exposure during the first-quarter.
Ian Beaton, CEO of Ark, commented on Ark’s results, “We are off to a good start in 2023 amidst a continuing strong rate environment, particularly in property and specialty. Driven by January renewals, gross written premiums were up 28% from 2022, with risk adjusted rate change up 14%.
“Looking forward, mid-year renewals are going well while market conditions remain attractive, and we are optimistic about continued profitable growth in the book.”
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