Ark’s Outrigger Re sidecar delivers more income to White Mountains in Q1 2024

White Mountains has reported that its investment into the Outrigger Re collateralized reinsurance sidecar, that supports its re/insurer subsidiary Ark, generated the company slightly more in pre-tax income through the first-quarter of 2024, despite the firm’s investment in the sidecar being smaller this year.

For underwriting year 2023, White Mountains was the lead investor behind subsidiary Ark Insurance Holdings’ $250 million collateralized reinsurance sidecar Outrigger Re Ltd, having provided $200 million of that capital.

When the Outrigger Re sidecar was renewed for 2024, White Mountains reduced its contribution to $130 million, as more third-party capital came in alongside the investor.

For full-year 2023, White Mountains reported that the pre-tax income earned from its stake in the Outrigger Re sidecar reached $69 million for the year.

2024 has begun well for the reinsurance sidecar, with Outrigger Re having only suffered minimal catastrophe losses through the first-quarter.

However, the WM Outrigger Re segment, which represents the results of White Mountains’ investment in the sidecar, reported a higher combined ratio at 32% for the first quarter of 2024, compared to 21% in the first quarter of 2023.

The 2024 underwriting year combined ratio was only 26%, but in Q1 2024 the combined ratio for the 2023 year exposure was 42%, White Mountains said.

With White Mountains investment into the sidecar having shrunk for 2024, the reportable segment of the structure has lower premiums for the period.

The company said that WM Outrigger Re wrote gross and net premiums of $34 million and earned net premiums of $10 million in Q1 2024, compared to written premiums of $44 million and earned premiums of $5 million in Q1 2023.

This was “due to White Mountains’s lower capital commitment to WM Outrigger Re in 2024,” the company said.

However, income earned rose slightly year-on-year, with the WM Outrigger Re segment reporting pre-tax income of $10 million in Q1 2024, $7 million of this being attributable to the 2024 underwriting year and $3 million to the 2023 underwriting year, compared to just $6 million of income in Q1 2023.

The Ark catastrophe reinsurance book seemingly had a very good start to the year, with low combined ratios again as catastrophe losses were minimal.

However, non-catastrophe losses did affect the company, including $15 million net related to the collapse of the Francis Scott Key Bridge in Baltimore and $16 million net related to a satellite loss.

Ian Beaton, CEO of Ark, commented, “We are off to a good start in 2024, with a combined ratio of 94%.  Gross written premiums increased 8% year-over-year, with risk adjusted rate change up 3%.  Market conditions remain attractive, although rate growth is slowing in several lines of business.”

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