Aspen Capital Markets AUM up 46% to $1.9bn in a year. H1 fee income hits $68m

Aspen Capital Markets, the third-party and alternative reinsurance capital management unit of global re/insurer Aspen, has lifted its assets under management in third-party capital and insurance-linked securities (ILS) vehicles by 46% over the twelve months to June 30th 2024, to reach a new high of $1.9 billion.

At the same time, the increased assets managed continue to drive a higher fee income contribution to the overall business, with Aspen Capital Markets operations delivering $68 million to the company in the first-half.

A year ago, at the mid-point of 2023, the Aspen Capital Markets AUM figure was at just $1.3 billion, but fee income earned for that H1 was $61 million.

Growth through the second-half of 2023 took the AUM figure to $1.7 billion and fee income to $136 million at the end of last year.

Further fundraising success has now lifted Aspen Capital Market’s assets under management by another 12% in the first-half to $1.9 billion by June 30th 2024.

This continued growth in capital sources helped in lifting the first-half fee income to a new high, Aspen reported.

Mark Cloutier, Executive Chairman and Group Chief Executive Officer, said, “Aspen continues on its path of delivering consistently strong performance. For the six months ended June 30, we reported top line growth, and a healthy annualized operating return on average equity and combined ratio. The results for both the second quarter and first six months demonstrate the robustness of our platform, and are in line with our expectations, given the major industry wide loss events in the period.

“In the first half of the year, we continued to match interesting business opportunities with our disciplined underwriting approach, which resulted in a 17% growth in our gross written premium to $2.5 billion (HY 2023: $2.1 billion). In addition to our underwriting performance, Aspen Capital Markets generated fee income of $68 million, representing a 13% growth, and we reported net investment income of $159 million, an increase of 23% from prior year. This resulted in operating income of $201 million up by 5%.

“Our adjusted combined operating ratio of 86.5% (HY 2023: 84.8%) reflects the impact of industry event major loss activity year over year, principally in the first quarter of the year compared to the prior year period.
Our view on trading conditions remains generally optimistic, and we believe there is ample opportunity for continued profitable growth within the construct of our current portfolio and appetite.”

The third-party and ILS capital fee income earned by Aspen gets reflected in its underwriting result as a reduction to acquisition costs.

Aspen Capital Markets provides an access point for investors to the specialty insurance and reinsurance portfolios of the parent and the team there has developed a specialism in enabling access to longer-tailed lines such as casualty risk.

In April this year, Aspen announced a collaboration with asset manager PIMCO, launching Pando Re Ltd., a Bermuda-based, casualty focused collateralised re/insurer that act as a reinsurance sidecar and it expected would drive growth of third-party capital and fee income for Aspen Capital Markets.

For the last quarter, Aspen reported that increased cessions of reinsurance premiums to Aspen Capital Markets structures drove higher ceding commissions in casualty lines, which contributed to a 1.1 percentage point improvement in its acquisition cost ratio for the period.

In the first-half of the year, Aspen noted that the third-party capital business also helped in moderating the firm’s property catastrophe exposure.

The company explained that, “Growth in Property catastrophe lines were offset by increased Aspen Capital Markets cessions therefore managing net catastrophe exposure and volatility.”

Aspen continues to leverage third-party investor appetite to drive growth and optimise its business, while earning fees through an aligned approach to risk-sharing with institutional and ILS investors.

Aspen Capital Markets is just one of the dedicated insurance-linked securities (ILS) fund managers, and reinsurers offering ILS-style investment opportunities, listed in our Insurance-Linked Securities Investment Managers & Funds Directory.