Elementum ILS funds up 15-20% in 2023: White Mountains CEO Rountree

White Mountains CEO Manning Rountree recently explained that the insurance-linked securities (ILS) funds managed by Elementum Advisors delivered 15-20% returns “across the complex” in 2023, a year when his company generated strong returns from its investments into insurance and reinsurance.

White Mountains took a 30% stake in ILS manager Elementum Advisors and as we’d previously reported, the value of that stake had increased through 2023.

By September 30th 2023, White Mountains reported the carrying value of its limited partnership investment into Elementum Advisors at $35 million, so up by $5 million since the end of 2022. At the same time the size of White Mountains stake had dropped to 26.6% by December 31st, with the value remaining at $35 million, implying a higher overall valuation of the Elementum ILS business.

But it’s the returns from the ILS funds that delivered for White Mountains in 2023, as the company had injected a further $100 million into Elementum’s ILS funds at the start of last year.

When we last reported a figure for the fair value of White Mountains investments into the Elementum Advisors ILS funds, it was quoted at $159.5 million at September 30th 2023.

As of December 31st 2023, the investment in the ILS funds operated by Elementum had risen to $161 million, White Mountains reported.

At the end of 2022, the value was reported as $49 million, to which the $100 million of new capital was added at the start of 2023.

So, doing the basic maths, if the Elementum ILS funds returned over 15% for 2023, White Mountains could have earned around $22 million on its investment in the ILS managers funds last year, it seems.

Helping to grow this, but also likely providing those capital returns to White Mountains as well, was the strong performance of the ILS fund industry in 2023.

Manning Rountree explained, on 2023 performance, “Elementum had a great year. Fund returns were strong, up 15-20% across the complex. AUM was up a touch, and EBITDA was up a lot, helped by strong realized performance fees.”

Elementum is not the only insurance-linked investment that White Mountains benefited from in 2023.

As we reported before, White Mountains’ investment into the Outrigger Re collateralized reinsurance sidecar that supports its re/insurer subsidiary Ark, generated the company $69 million in pre-tax income during the course of 2023.

CEO Manning Rountree noted that, “Outrigger Re performed well, producing a roughly 35% return on capital for our account in 2023.”

Further explaining that the White Mountain commitment to Outrigger Re has generated “outsized returns.”

As we reported, the Outrigger Re sidecar was renewed for 2024, with White Mountains still the lead investor, contributing $130 million of the $250 million in sidecar capital for 2024.

Also read: Elementum in phenomenal shape, excited about future opportunities: John DeCaro.