Elementum’s EBITDA hit $19m for 2023, more than double prior year: White Mountains

Elementum Advisors, LLC, the insurance-linked securities (ILS) fund management and collateralized reinsurance underwriter, saw its adjusted EBITDA rise to $19 million for 2023, which was more than double the previous year, stakeholder White Mountains has said.

Recall that, White Mountains acquired what was a 30% stake in ILS fund manager Elementum Advisors in May 2019.

As a holding, Elementum Advisors in about more than just the ownership stake for White Mountains, as the company also has $110 million invested into Elementum ILS funds as of the first-quarter of this year.

The ownership stake is now being reported as 27%, given changes to the valuation of the ILS manager since White Mountains bought in.

White Mountains said that 2023 was a strong year for Elementum Advisors and the broader ILS market.

The company reported that full-year 2023 adjusted EBITDA for Elementum reached $19 million, which was more than double the $9 million earned in 2022.

Performance fees were the main driver of the much improved EBITDA at Elementum, White Mountains explained, delivering continued strong cash yield for its investment in the ILS fund manager.

But, in addition, White Mountains said that fund returns from its investment in Elementum’s ILS strategies were 16% for 2023.

The company had $125 million invested in Elementum’s range of ILS fund strategies at the middle of last year, so 16% returns on that would have been around the $20 million mark, it appears.

Which, for White Mountains, makes for a very strong year of earnings from its investment into Elementum Advisors.

While Elementum’s assets under management have declined slightly through the start of 2024 to $3.6 billion at the end of Q1, according to the latest data in our Insurance-Linked Securities Investment Managers & Funds Directory, White Mountains said it has been a decent start to the year for the ILS manager.

In fact, trailing twelve month adjusted EBITDA is running at $18 million, White Mountains said, with fund returns from the allocations to Elementum ILS funds running at 4% through April.

Overall, White Mountains reports that, “Market dynamics for ILS investing remain positive.”

White Mountains also has an ILS investment into the Outrigger Re sidecar operated by its re/insurance subsidiary Ark.

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

The company said that the risk-return profile for Outrigger Re remains attractive and that both January and April reinsurance renewals were “healthy” for the structure.