PartnerRe, the Bermuda headquartered reinsurance company, continued to cede a significant amount of premiums to its main insurance-linked securities (ILS) vehicle Lorenz Re in 2022, but signalling the effects of loss activity, the firm’s reinsurance recoverable from segregated cells of the structure soared.
PartnerRe continued to have over $1 billion of third-party capital assets under management back at the mid-point of 2022, with the Lorenz Re structure the main home for them, we understand.
The reinsurance firm has been developing relationships with large investors, as well as benefiting from special purpose reinsurance vehicle investments that came about through the Covéa / EXOR arrangements and continue today.
Lorenz Re is a special purpose insurance company, registered as a segregated accounts vehicle in Bermuda, and it remains the most important ILS structure at PartnerRe, which is again clear in its 2022 full-year figures.
PartnerRe launched Lorenz Re back in 2013, with the structure used as a kind of collateralized reinsurance sidecar for a number of years, then entering into private quota share deals with ILS investors as well.
In 2022, PartnerRe reports that it ceded $664 million of written premium to its Lorenz Re Ltd. vehicle, up a little on the $634 million ceded to it in 2021.
Lorenz Re has become a significant retrocessional reinsurance structure for PartnerRe, playing a key role in how the firm manages its catastrophe PML’s.
That has become more evident than ever in 2022, with a significant increase to the reinsurance recoverable PartnerRe reports from Lorenz Re.
PartnerRe has recorded a reinsurance recoverable on paid and unpaid losses from Lorenz Re segregated cells amounting to $921 million at the end of 2022.
That’s up by some 56% on the end of 2021 reinsurance recoverable figure of $592 million.
Lorenz Re has clearly seen a share of loss activity through 2022, with the reinsurance recoverable attributed to the SPI increasing far quicker than PartnerRe’s overall reinsurance recoverable has.
It’s possible hurricane Ian is one driver and of course this does suggest investors will have taken their share of the losses that contributed to this build-up of the Lorenz Re reinsurance recoverable in 2022.
It’s important to note though, that this is also a reflection of the increasing scale of the Lorenz Re operation and its importance to PartnerRe.
Overall, PartnerRe’s reinsurance recoverable reached $1.96 billion at the end of 2022, across non-life and life books, up from $1.787 billion at the end of 2021.
So, it’s clear Lorenz Re is an important reinsurance lever for PartnerRe, as it continues to utilise third-party capital within its business.
Finally, it’s interesting to note that of PartnerRe’s overall $1.96 billion of reinsurance recoverable, some 81% is said collateralized, which will include the Lorenz Re totals, but also any other collateralized reinsurance and retrocession PartnerRe enters into.
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