White Mountains reports $153.3m of ILS fund investments, low sidecar CR

White Mountains Insurance Group has reported that the value of its investments into insurance-linked securities (ILS) funds has risen by 211%, as additional allocations to Elementum Advisors, the ILS fund manager it has an ownership stake in, lifted the total considerably.

White Mountains has demonstrated an increasing appetite for deploying its own capital into reinsurance via ILS funds and structures over recent years.

The company took an ownership stake in ILS fund manager Elementum Advisors back in 2019, also deploying capital to some of its ILS fund strategies.

The appetite for deploying more capital to ILS or reinsurance-linked investments was then evidenced by White Mountians becoming the lead investor behind its subsidiary Ark Insurance Holdings’ $250 million collateralized reinsurance sidecar Outrigger Re Ltd.

Then, the company announced that it would deploy a further $100 million to ILS funds managed by Elementum, as it looked to benefit from the market opportunity in 2023.

At the end of 2022, White Mountains reported that the carrying value of its ILS fund investments were booked at $49.3 million.

Now, six months on, it’s clear the deployment of the new investments has been completed in full.

As, in its latest results statement, White Mountains reports the carrying value of its ILS fund investments now sits at $153.3 million, at June 30th.

The significant 211% increase seemingly includes not just the $100 million of allocations made in 2023, but also some retained earnings from the returns that the Elementum ILS funds have been making.

Allocating to these ILS funds can deliver returns to White Mountains, through another alternative access point to the insurance and reinsurance market, while also supporting the ILS manager it owns a stake in.

White Mountains looks set to earn returns from its other ILS structure investment, the Outrigger Re sidecar vehicle, as for the first-half of 2023 the company reported that the Outrigger Re combined ratio was just 25% and 24% in the second quarter and first six months of 2023 respectively.

In H1 2023, losses and loss adjustment expenses contributed just 4.1% to the low combined ratio.

In addition, White Mountains own investment into Outrigger Re is reported as generating gross and net written premiums of $58 million and $102 million and net earned premiums of $10 million and $15 million, for Q2 and H1 of 2023 respectively in each case.

Finally, the Outrigger Re sidecar has also been cited as a factor in Ark’s gross written premiums increasing by 50% to $606 million in the second quarter of 2023, as the additional third-party capital support helped the company expand its reinsurance business.

At the same time, the Outrigger Re Ltd. portfolio of global property reinsurance saw a risk-adjusted rate change of 35% in the second quarter of 2023, White Mountains reported.