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Aspen Capital Markets, the third-party and alternative reinsurance capital management unit of global re/insurer Aspen, continued to increase its assets under management in the third-quarter of 2024, surpassing $2 billion for the first time, reflecting growth of 38% in the last year.
At the same time, fee income earned by Aspen for managing the third-party assets and the performance of the multi-lined approach to insurance-linked securities (ILS) and reinsurance investments, has also increased, rising 45% in the third-quarter alone.
A year ago, Aspen’s third-party reinsurance capital under management reached $1.4763 billion, but after Q3 2024 it has now risen to $2.0407 billion, an increase of 38% over the last twelve months.
By the end of 2023, Aspen’s AUM figure grew further to $1.7 billion and fee income reached $136 million at the end of last year.
Additional fundraising success helped Aspen Capital Market’s increase the units assets under management by another 12% in the first-half to $1.9 billion by June 30th 2024.
The growth has continued and now the $2 billion milestone has been reached, as Aspen Capital Market’s continues to attract investors to its multi-lined ILS and third-party aligned capital management offering.
Mark Cloutier, Executive Chairman and Group Chief Executive Officer of Aspen, commented on the third-quarter and nine month results for the company, “Aspen has once again delivered strong performance across our underwriting and investment portfolios, and from Aspen Capital Markets.”
Cloutier highlighted that, over the nine months of 2024, “Aspen Capital Markets generated fee income of $112 million, an increase of 22%.”
“In a year challenged by a number of industry-wide major loss events, these results are driven by Aspen’s expert and disciplined underwriting, consistent investment performance and a growing contribution from Aspen Capital Markets, resulting in an annualized return on average equity of 17.6%,” Cloutier added.
Looking further into the numbers reported, Aspen’s Capital Markets business generated an impressive $44 million in fees for the third-quarter of 2024 alone, which is a 45% increase on the prior year’s $31.1 million.
This fee income represents ceding commissions and is accounted for as a reduction to acquisition expenses by Aspen.
Higher cessions have continued, as Aspen has grown the third-party capital partnerships and assets under management, with Aspen growing this business further into longer-tailed casualty lines of business.
Higher ceding commissions from this increased Aspen Capital Markets activity serves to reduce the expense ratio for Aspen, and the company noted that catastrophe, property and casualty lines cessions all increased, to existing and new vehicles.
Unlike many insurance and reinsurance companies that have a single focus on property catastrophe risks, when it comes to third-party capital partnerships, Aspen has embraced a multi-line approach.
In particular, this has covered both insurance and reinsurance arms, including FinPro, casualty and property reinsurance risks.
It’s a strategy that is clearly working, as the ratio of fee income earned to assets under management suggests Aspen has created a particularly profitable strategy here.
A strategy that continues to build, as for full-year 2023 Aspen Capital Markets fee income reached $136 million, but this year it looks like the company will eclipse that again, being at $112 million already.
In April this year, Aspen launched a partnership with asset manager PIMCO, on Pando Re Ltd., a Bermuda-based, casualty focused collateralised re/insurer that act as a reinsurance sidecar and which is expected to drive growth of third-party capital and fee income for Aspen Capital Markets.
Aspen is clearly benefiting from the new vehicle already and continues to leverage third-party investor appetite to drive growth and optimise its business, while earning increasingly meaningful fees through its aligned approach to risk-sharing with institutional and ILS investors.
Aspen Capital Markets is just one of the dedicated insurance-linked securities (ILS) fund managers, and reinsurers offering ILS-style investment opportunities, listed in our Insurance-Linked Securities Investment Managers & Funds Directory.
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