Insurance holding company W. R. Berkley Corporation is making good use of its first collateralized reinsurance sidecar, now having ceded $139 million of property and casualty reinsurance premiums from across its business to the structure in its first year.
W. R. Berkley launched the Bermuda based special purpose insurer (ILS) named Lifson Re Ltd. in time for January 2021, having raised $250 million in capital for the sidecar.
Lifson Re operates as a kind of property & casualty (P&C) reinsurance sidecar structure for the company, participating in its reinsurance cessions and bringing efficient third-party capital into W . R. Berkley’s reinsurance tower.
It was never quite clear just how broad a participation Lifson Re had in W. R. Berkley’s reinsurance towers, but it’s now become clear that in suitable cases, where the risk meets the strategies requirements, participation can be meaningful.
Lifson Re participates in the majority of W. R. Berkley’s reinsurance placements, the company has reported and can take up to a 22.5% share of the total amount placed.
Which is a meaningful proportion of W. R. Berkley’s ceded reinsurance capacity, providing a useful financial lever for protection and also growth, on a quota share basis.
In terms of the spread of business that Lifson Re is able to allocate capital to, by participating in these reinsurance deals, it encompasses all reinsurance and retrocession cessions that W. R. Berkley may enter into across the firm’s property and casualty business.
Which means the mix of business ceded to Lifson Re could also be quite diverse, as the sidecar structure can support far more than the more typical property and catastrophe business that reinsurance sidecars more typically support.
The Lifson Re sidecar is able to participate on any reinsurance or retrocession where there is more than one open market reinsurer participating.
This is positive for its owner, W. R. Berkley, in more ways than just bringing capacity.
Lifson Re can also act as a tool to help drive more favourable pricing as well, by participating alongside open market reinsurers.
It’s clear Lifson Re has been well-used throughout the first-half of 2021 as well, as W. R. Berkley said that it had already ceded $139 million of written premiums to Lifson Re by the middle of the year.
W. R. Berkley previously revealed that the Lifson Re sidecar only has two investors backing it, both institutions with experience in the reinsurance market.