Pension PFZW gets $175m Vermeer Re dividend, while income earned rises 12% as well

Dutch pension PFZW, which is the single largest end-investor in insurance-linked securities (ILS) through its portfolio that is administered by PGGM, has taken a $175 million dividend from Vermeer Reinsurance Ltd., the joint-venture and rated underwriting vehicle that RenaissanceRe manages on its behalf.

Vermeer Reinsurance Ltd. (Vermeer Re) was launched and began underwriting for the January 2019 reinsurance renewals, as RenRe teamed up with long-time insurance-linked securities (ILS) institutional investor PGGM, and it became the first managed and ‘A’ rated reinsurance vehicle for a single pension investor.

The structure has proven very profitable for the pension investor PFZW, with the company having grown its investment in the reinsurer, with new contributions and by rolling the income, which took Vermeer Re’s total balance-sheet to $2 billion in the past.

Now, there is evidence of how profitable this strategy is proving, as PFZW takes earnings from the reinsurance joint-venture in the form of dividends and growing income.

In the first-quarter of 2024, the PFZW pension fund benefited from a significant dividend from Vermeer Re, amounting to $175 million.

That shows the pension investor reaping the spoils of a very profitable reinsurance underwriting year in 2023.

At the same time, for the first-quarter of 2024, Vermeer Re generated almost $53 million of net income attributable to the pension backers of the reinsurance company.

That’s up by nearly 12% on the $47.4 million of income attributable to redeemable non-controlling interests in Vermeer Re a year earlier.

For the investors, ultimately pension PFZW and the investment manager PGGM, it seems Vermeer Re has reached about its maximum size to efficiently access the current reinsurance market opportunity, as the balance-sheet has not grown back to the near $2 billion it had previously reached and now more in earnings can be taken through dividends.

Vermeer Re’s balance sheet assets are reported at $1.9 billion at the end of the first-quarter of 2024, while redeemable non-controlling interest is reported at just over $1.43 billion, which largely represents PFZW’s investment and capital retained in the reinsurer.

However, that balance-sheet size is up from the $1.7 billion reported at the end of 2023.

Vermeer Re appears to be right-sized for the current reinsurance underwriting opportunity and is delivering very attractive gains for PFZW’s investment into the reinsurer.