Riverstone gets $305m multi-year collateralised reinsurance funded via JP Morgan

In a major deal that is similarly structured to the landmark Lloyd’s Central Fund reinsurance arrangement from 2021, legacy acquisition focused Lloyd’s specialist underwriter RiverStone International, has secured $305 million of multi-year collateralised reinsurance, with funding led by investment bank JP Morgan and transacted via a White Rock cell structure.

Riverstone is a significant player in the legacy and run-off reinsurance market, but capital is critical in this space and now the company has found another way to add more firepower, by drawing on the interest in reinsurance-linked investments from third-party capital, in this case banking and investment giant JP Morgan.

RiverStone announced that this new “innovative multi-year excess of loss corporate member reinsurance cover” is designed to support its recent legacy transaction activity, including its previously announced RITC and LPT with MS Amlin.

The $305 million layer of reinsurance has been underwritten using a newly created Aon White Rock cell company, Xenon IC Limited, with the financing led by investment bank JP Morgan.

This reinsurance arrangement was designed and placed by Aon’s capital advisory team in London, who had also delivered the landmark Lloyd’s Central Fund reinsurance deal in 2021.

That Lloyd’s reinsurance deal in 2021 saw a a £650 million cover arranged for its Central Fund, with £450 million of it provided by JP Morgan and fully collateralised in a similar way.

The Riverstone deal appears to reinsure the Corporate Member, so provides a direct lever of capital that the company can utilise in boosting its underwriting capacity, backed by third-party capital, collateralised and in multi-year form.

As a result, this is a very efficient way for a Lloyd’s entity to secure reinsurance capital to fund growth, from the capital markets. While also demonstrating an effective way that third-party capital providers can access the returns of leading underwriters in the Lloyd’s marketplace.

The structure gives Riverstone a fully collateralised layer of reinsurance to support its Funds at Lloyd’s.

The reinsurance arrangement has the ability to grow or shrink, in line with the future underwriting activity of RiverStone Syndicate 3500.

It also provides adverse development cover protection, for the syndicate’s policyholders covering severe tail events, while also improving the quality and financial strength of RiverStone International’s balance sheet.

Andy Creed, RiverStone International CFO, commented, “We are delighted to have completed this significant reinsurance placement which demonstrates our strong focus on maintaining a highly efficient and flexible capital structure in support of our legacy solution offerings.

“Aon’s engagement and creativity combined with the support and commitment from one of the world’s largest investment banks, JP Morgan is testament to RiverStone International’s leading market presence in the legacy sector. The product supports the ongoing growth of our syndicate, strengthens security for our customers, and enables us to continue to deliver effective legacy solutions to our Lloyd’s clients.

“In conjunction with the new reinsurance, we have also extended the funding provided by other third-party capital providers, who continue to provide strong support to our growing business. Our capital management and funding position is now more resilient than ever.”

This is another landmark deal, in terms of how third-party capital from the capital markets can access Lloyd’s through collateralised reinsurance deals to support market participants growth.

It’s also significant in size for Riverstone, providing a significant boost to its ability to underwrite large, legacy deals.