Northern Re, the collateralized reinsurance firm that gives traders with entry to the returns of its long-tail casualty underwriting enterprise, has introduced elevating a further $100 million from present and new institutional investor companions.
Northern Re, based mostly within the Cayman Islands and in addition working out of New York, launched in early 2023 trying to deploy third-party capital it raised from traders in opposition to a choose group of traditionally worthwhile insurance coverage portfolios centered on high-frequency, low-severity insurance coverage dangers.
The corporate lifted its committed capital to $75 million towards the end of 2023, which helped it to develop its footprint and the scale of its underwriting portfolio.
With the brand new capital increase introduced right now, Northern Re has taken its whole capitalisation to $175 million and stands positioned to speed up its development within the casualty insurance-linked securities (ILS) market.
The corporate mentioned the extra capital will likely be used to strengthen each unencumbered surplus and collateral positions.
Northern Re’s technique sees it splitting its capital stack right into a collateral pool, to fund reinsurance obligations, and a surplus pool, which is unencumbered capital that sits in reserve.
Northern Re mentioned it’s “dedicated to posting collateral in money, with out counting on letters of credit score – a significant differentiator within the ILS trade.”
“This increase represents a powerful vote of confidence in our enterprise mannequin and development technique,” commented Anthony McKelvy, co-Founder and Managing Accomplice of Northern Re. “We’re notably happy to welcome new traders with long-term views on the Casualty ILS market alongside our present companions who proceed to help our imaginative and prescient.”
“Our technology-driven strategy to danger evaluation and capital allocation represents a big aggressive benefit,” added Peter McKelvy, co-Founder and Managing Accomplice. “These capabilities enable us to reply extra successfully to market alternatives whereas sustaining disciplined underwriting requirements throughout our rising portfolio. As well as, our subtle capital modeling is engrained within the underwriting course of as we search to ship alpha for our traders and cedents via extra environment friendly deployment.”
Northern Re now expects to underwrite in extra of $500 million in gross written premium (GWP) throughout 2025.
Its capital will likely be invested behind a diversified portfolio dangers from US and international carriers throughout casualty traces, whereas concentrating on development via program and conventional writers, particularly through structured quota shares and progressive merchandise designed to supply low-cost surplus reduction for ceding companions, the corporate defined.
