Everest Re Expands Use of ILS Investor Capital: Mt. Logan President Modin

Global insurance and reinsurance company Everest Re is expanding its use of capital from insurance-linked securities (ILS) investors, with its third-party venture capital Mt. Logan Re Ltd. a central part of the company’s efforts to reduce its disaster exposures, according to John Modin, president of Mt. Logan Re.

As we recently announced, Everest Re continued to take steps to reduce its exposure to property catastrophe volatility in the first quarter of the year, with its excess of loss reinsurance business writing falling to just 16 % of its first trimester. quarter pound.

Key to the effort to reduce its catastrophic PMLs is Everest Re’s third-party capitalized ILS structure, Mt. Logan Re, which should benefit the reinsurer by providing a complementary capital platform with risk appetite. of disaster.

Speaking to Artemis in a recent interview, Mt. Logan Re President John Modin explained why this is important.

“As part of our work to manage and reduce catastrophic PML, we are expanding our sources of underwriting capital, optimizing our balance sheet capital structure and expanding our use of capital from ILS investors, particularly in our Mt. Logan vehicle” , said Modin. “These collective efforts will improve our risk-adjusted operating margin while reducing volatility. It also creates a proactive and scalable management model and results in an optimized capital structure that enables dynamic allocation of capital to the most attractive opportunities.

“Mt. Logan Re and our other third-party capital structures give Everest a distinct competitive advantage by allowing us to provide significant capacity to our customers while managing our portfolio volatility and lowering our cost of capital. At the same time , we are able to offer competitive returns to our capital markets partners based on their respective risk appetite through a suite of products. We have built Mt. Logan into a strong branded entity and we we are committed to the platform and have ambitious plans to grow AUM,” he continued.

Everest Re expects to achieve this in the coming year, partnering with new sources of third-party capital through the Mt. Logan Re vehicle, while tapping into bond investor appetite. disasters through its well-established Kilimanjaro Re cat bond series.

Also demonstrating his commitment to working with third-party capital, Modin highlighted his own hiring by Everest Re to lead the Mt. Logan Re division, as well as the recent hire of Greg McBride as global head of marketing and business development. and Clint Graham as Chief Underwriting Officer, as well as the latest from veteran retirement investor Youssef Sfaif joining Mt. Logan Re as Chief Operating Officer.

This platform build comes amid reinsurance rate tightening and Everest Re’s optimization of its catastrophe exposure, providing a good opportunity for Mt. Logan Re to grow its asset base this year, it seems. he.

Modin sees traction building, saying “we added a new investor on January 1, 2022 and are in discussions with several others about future subscriptions.”

Adding that “Everest, Mt. Logan, our principal investors and certain potential investors all recognize the long-term performance and diversification value of ILS/Mt. Logan and we are all committed to continuing to invest in it for the long term.” ”

Modin also believes that the broader financial and capital market volatility that has been observed will work in favor of ILS as a diversified asset class.

“The risk aversion sentiment in equities and credit as well as the current tough market experienced by all lines of P&C insurance have reminded investors of the unique diversification benefit that the insurance-linked asset class introduced when added to a traditional investment portfolio,” Modin explained.

For Everest Re, Mt. Logan continues to be used in the same way, but its importance may be increasing as the company seeks to manage its disaster exposure more proactively.

“We continue to use Mt. Logan on the same long-term, consistent basis as it always has – as a way to share a single portfolio of Everest-underwritten risks with our financial partners, giving them access to our global expertise. UW, and in turn providing Everest with additional UW capacity and fee revenue,” Modin said.

Further explaining that “like Everest shareholders, Mt. Logan investors have benefited from the improvement in 2022 in the overall quality of the underlying portfolio as well as the high rate environment.”

As we explained in a recent article, Everest Re CEO Juan Andrade recently said that as his company refines its underwriting portfolio, it finds that trading more profit, for less exposure, is exceptional.

Mt. Logan Re is an important lever for maximizing the benefits of this portfolio steering and optimizing cat exposure for the business.

Printable, PDF and email version

Comments are closed.