Northern Re launched as new collateralized reinsurer with $25m initial capital

A new collateralized reinsurance company has been formed, with Cayman Islands-based Northern Reinsurance SPC, Ltd. (Northern Re) established by brothers Anthony and Peter McKelvy to deploy capital against a select group of historically profitable portfolios they know well.

Northern Re has been launched in 2023 with $25 million of initial capital committed by a private investment group, a first tranche of a multi-phase capital allocation and deployment process, through which Northern Re intends to drive its growth.

The company aims to leverage deep sector knowledge along with a modern framework, to enable third-party capital to participate in the insurance-linked securities (ILS) asset class.

The founding McKelvy brothers have a background in insurance, reinsurance, particularly on the program business side of the industry, as well as investment management and alternative asset classes.

“Diversification into alternatives is an important part of any family office or institutional strategy. In the past five years, the evolution of the traditional reinsurance market and standardization around casualty ILS has created an opportunity for private capital to generate returns superior to other low-beta assets on a risk-adjusted basis,” explained co-Founder Peter McKelvy.

Northern Re will target allocating capital to high-frequency, low-severity insurance risks that the company says represent highly modeled books of business that can deliver steady returns for their capital partners.

The company has been established with a regulatory and financial infrastructure that the founders believe can unlock an ability to enter into tailored solutions for investors and counterparties alike.

Northern Re will target lines of insurance business including, but not limited to, personal and commercial auto, general liability, workers compensation, and other professional lines.

Counterparties are expected to be regional carriers, or managing general agents (MGA) and managing general underwriters (MGU), where they feel the reinsurance structure delivers a greater alignment of interest for both sides of the trade, employing underwriting, analytics and actuarial expertise to meet the needs of all parties.

“We have worked with many of the major fronting companies in the US during our development in order to create a structure that provides exceptional collateral and additional layers of financial security,” added co-founder Anthony McKelvy. “Our team has a wealth of experience both in the industry and across verticals. We are excited to already be supporting several great partners throughout the market in Q1 and look forward to future trading relationships with historically strong companies.”

Northern Re will operate as a segregated portfolio company, having gained a B(iii) license from the Cayman Islands Monetary Authority.

On the founders, Anthony McKelvy has worked for brokers Willis Re and Guy Carpenter, as well as program focused insurtech company Boost Insurance, while Peter McKelvy hails from the Park Agency family office, and was formerly an employee at Uber and also Boost Insurance.

Northern Re said that it is “committed to providing an effective new reinsurance solution and expects to bring additional capital capacity online in 2023.”