Aspen Capital Markets hits $1.7bn AUM, lifts fee income 31% to $136m
Aspen Capital Markets, the third-party and alternative reinsurance capital management unit of global re/insurer Aspen, continued to expand its funding for third-party capital and insurance-linked securities (ILS) vehicles, as total capital sourced reached $1.7 billion by the end of 2023.
That’s a roughly 31% increase in assets under management and deployed to collateralized reinsurance opportunities for insurance-linked investors by the Aspen Capital Markets team, over the $1.3 billion that was reported at the end of 2022.
At the same time, fee income earned by the activities of the Aspen Capital Markets team has also increased by just under 31%, having risen from full-year 2022’s $104 million in fees earned, to 2023’s $136 million.
At the end of 2021, Aspen had grown its third-party and insurance-linked securities (ILS) assets under management to almost $918 million, while earning $61.4 million in fees from those activities during that year.
By the end of 2022, the Aspen Capital Markets assets under management (AUM) figure stood at $1.3 billion, while the fee income had reached $104 million in that year.
For full-year 2023, the AUM has reached $1.7 billion, while the fee income earned has risen commensurately to $136 million, with both figures rising 31% over the course of last year.
Aspen’s third-party capital fee income was running at $61 million after the first-half of this year, so the rate has accelerated with the rising assets under management deployed.
In fact, Aspen Capital Markets added $200 million in the final quarter of 2023, having reported $1.5 billion of capital in its strategies at the end of Q3 last year.
Mark Cloutier, Executive Chairman and Group Chief Executive Officer, commented yesterday, “For the full year 2023, Aspen Capital Markets generated $136 million in total fee income from capital sourced across multiple lines and classes in both our insurance and reinsurance segments.
“It is pleasing to note the quality of earnings we are now generating, with meaningful contributions from each of our core earning engines, underwriting, investments and capital markets fees. We believe we have reached a state where we are able to sustain strong ROEs across cycles through the very healthy mix in the sources of our earnings.”
He added, “The combination of our “One Aspen Approach”, balance sheet strength, and capital markets capabilities, positions us with a distinct advantage in the specialty (re)insurance sector, with the scale being an important source of capacity to our customers while still maintaining the ability to be nimble, decisive, and opportunistic in response to changes in trading conditions and market opportunities.”
The company noted that it is the continued growth in capital sourced by Aspen Capital Markets that is driving the fee income higher, hence the commensurate rise in assets and fee income.
This was evident in the increased cessions made to Aspen Capital Markets strategies from the insurance segment, which helped to drive the fee income higher.
Aspen Reinsurance has been repositioning its property catastrophe exposures in 2023, part of which has resulted in greater cessions to third-party capital.
The company explained that, “Net catastrophe exposure has been further reduced through increased cessions to Aspen Capital Markets on our property reinsurance lines.”
The additional fee income being earned through the Aspen Capital Markets business unit is also helping Aspen Reinsurance to reduce its acquisition cost ratio, alongside which it is helping the company manage volatility in catastrophe exposure.
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.
