Northern Re raises $100m to accelerate growth in the casualty ILS market

Northern Re, the collateralized reinsurance company that provides investors with access to the returns of its long-tail casualty underwriting business, has announced raising an additional $100 million from existing and new institutional investor partners.

Northern Re, based in the Cayman Islands and also operating out of New York, launched in early 2023 looking to deploy third-party capital it raised from investors against a select group of historically profitable insurance portfolios focused on high-frequency, low-severity insurance risks.

The company lifted its committed capital to $75 million towards the end of 2023, which helped it to grow its footprint and the size of its underwriting portfolio.

With the new capital raise announced today, Northern Re has taken its total capitalisation to $175 million and stands positioned to accelerate its growth in the casualty insurance-linked securities (ILS) market.

The company said the additional capital will be used to strengthen both unencumbered surplus and collateral positions.

Northern Re’s strategy sees it splitting its capital stack into a collateral pool, to fund reinsurance obligations, and a surplus pool, which is unencumbered capital that sits in reserve.

Northern Re said it is “committed to posting collateral in cash, without relying on letters of credit – a meaningful differentiator in the ILS industry.”

“This raise represents a strong vote of confidence in our business model and growth strategy,” commented Anthony McKelvy, co-Founder and Managing Partner of Northern Re. “We’re particularly pleased to welcome new investors with long-term perspectives on the Casualty ILS market alongside our existing partners who continue to support our vision.”

“Our technology-driven approach to risk assessment and capital allocation represents a significant competitive advantage,” added Peter McKelvy, co-Founder and Managing Partner. “These capabilities allow us to respond more effectively to market opportunities while maintaining disciplined underwriting standards across our growing portfolio. In addition, our sophisticated capital modeling is engrained in the underwriting process as we seek to deliver alpha for our investors and cedents through more efficient deployment.”

Northern Re now expects to underwrite in excess of $500 million in gross written premium (GWP) during 2025.

Its capital will be invested behind a diversified portfolio risks from US and global carriers across casualty lines, while targeting growth through program and traditional writers, in particular via structured quota shares and innovative products designed to provide low-cost surplus relief for ceding partners, the company explained.