Ariel Re uses Lloyd’s London Bridge 2 vehicle for $170m of $270m capital raise

Global reinsurance company Ariel Re continues to seek new and efficient ways to enhance its capital-base, with the latest example a $270 million raise to support 2023 expansion, $170 million of which is channelled via Lloyd’s London Bridge 2 PCC insurance-linked securities (ILS) structure.

The $270 million of capital has been raised from five new institutional and family office investors, Ariel Re explained this morning.

As well as this, the reinsurance firm said that its core backers Pelican Ventures and JC Flowers have meaningfully increased their underwriting capital commitments to further support Ariel Re’s growth through the year ahead.

As part of this capital raise, Ariel Re has secured $170 million of the financing through Lloyd’s UK protected cell company London Bridge 2 PCC Ltd.

As a result, Ariel Re has become the first sponsor to raise capital through the London Bridge 2 ILS structure.

Lloyd’s launched the London Bridge 2 ILS structure last August.

“Given our proven expertise in lines of business undergoing significant change, such as property catastrophe and cyber, Ariel Re is well-positioned to help investors access what we believe to be very attractive underwriting opportunities,” explained Ryan Mather, Chief Executive Officer at Ariel Re.

“While many carriers are pulling out of these risks, we are able to grow backed by investors who understand the nuances of a cyclical reinsurance market. We are delighted that part of our new funding is the first successful example of investors coming to Lloyd’s via the innovative LB2 structure; it was more efficient than ever to deploy meaningful capacity in Syndicate 1910.”

Burkhard Keese, Chief Financial Officer and Chief Operating Officer, Lloyd’s of London, also commented “I’m delighted that Ariel Re chose the LB2 structure to facilitate delivery of this new capital into the Lloyd’s market, a key deliverable of the Future at Lloyd’s strategy.

“We set the London Bridge PCC vehicle up to be as flexible and responsive as possible and with oversight of the UK’s PRA, we now believe we have an onshore UK structure that can rival any of the established offshore vehicles in other jurisdictions. We hope that Ariel Re will be the first of many to use LB2.”

Ariel Re also recently secured $125 million of reinsurance via its Titania Re catastrophe bond structure, while also innovating by embedding a carbon offset commitment within the cat bond structure, a new first.

We’re told by sources that Ariel Re has secured sidecar capacity for 2023 as well.