Leadenhall backed Nectaris Re targets hard market rates through open writings

Nectaris Re Ltd., the Class 3A Bermuda-based rated reinsurance underwriting platform backed by London headquartered specialist insurance linked securities (ILS) and reinsurance related investments manager Leadenhall Capital Partners LLP, has been writing more open market risks to target the hard reinsurance rates that are available.

Nectaris Re was launched with Leadenhall backing through a Mutual Cooperation Agreement in 2021.

The relationship provides the long-standing ILS fund management business with a rated reinsurance underwriting platform through which it can source business from the market.

Largely, this business comes via Lloyd’s Syndicate 2001 (managed by MS Amlin Underwriting Ltd.) and MS Reinsurance, both of whose parent company is MS&AD.

This business had accounted for the majority of total limits ceded to Nectaris Re up until 2022 when the reinsurance vehicle said it would target more open market business to benefit from hard market conditions.

Now, rating agency AM Best has affirmed the Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Rating of “a” (Excellent) of Nectaris Re Ltd. (Nectaris Re), the operating subsidiary of Nectaris Holdings Ltd., with stable outlooks for all credit ratings and indicated that the open market underwriting has indeed increased.

While business sourced from MS&AD subsidiaries remains the bulk of reinsurance premiums ceded to Nectaris Re, AM Best explained, “Nectaris also sources business via its open market operations to take advantage of the hard reinsurance market, with limited impact on its tail risk and capital.”

While, “All open market business ceded to Horseshoe Re II is collateralized at the 1-in-2,000 AEP return period, with the associated tail risk retained by Nectaris Re.”

AM Best noted the “adequate operating performance, limited business profile and appropriate enterprise risk management” of Nectaris Re, saying that it judges the reinsurers balance sheet strength as “strongest”.

Nectaris Re retrocedes all its business to segregated cells of Horseshoe Re II Limited and those cells are funded by insurance-linked securities funds managed by Leadenhall Capital Partners LLP, the ILS manager with a track-record dating back to 2008.

AM Best also noted that it projects Nectaris Re’s risk-adjusted capital to remain at the strongest level over the near term, of one to three years.

Nectaris Re underwrites predominantly property catastrophe reinsurance and benefits from risk diversification across regions, perils and the number of cedants, AM Best noted.

The Nectaris Re platform offers an efficient and rated route to access reinsurance risk for Leadenhall Capital Management’s ILS funds and investors, with growth of the reinsurer and its importance expected to increase over time.