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Global insurance and reinsurance group Everest has reported significantly increased cessions from its property catastrophe line of business to cells of Mt. Logan Re Ltd., the main underwriting vehicle of its Mt. Logan Capital Management, Ltd. (MLCM) third-party capital management business.
Ceded premiums to Mt. Logan Re had already been on the rise in recent quarters, a trend that continued in the second-quarter of this year.
But, in the third-quarter of 2024, the amount of written premiums that were ceded to segregated accounts of the Mt. Logan Re vehicle rose by a significant 164% year-on-year and after September 30th the year-to-date ceded written premiums figure was up by 116%.
It suggests a ramp-up of activity at Mt. Logan Capital Management, as the third-party capital management unit brings new investor capital onboard and increases its activity levels for Everest.
As we reported last month, Dutch pension investment manager PGGM allocated $200 million to a new quota share structure named Scenery Re that is managed by Everest’s specialist unit Mt. Logan Capital Management, Ltd. (MLCM).
It’s possible some of the additional premiums ceded to Mt. Logan Re were destined for that new investor relationship and structure, although we cannot be certain.
The jump in activity, in terms of cessions from the parent Everest to its third-party capital vehicle Mt. Logan Re Ltd. is significant, in being such a large increase.
It suggests growing third-party capital under management to support the premium business, at Mt. Logan Capital Management, Ltd. (MLCM), as well as implying the potential for higher fee income from third-party capital management to be earned by the parent in future as well.
Everest reported that, across the Group result, “Net written premiums decreased by 1.6% to $3.8 billion for the three months ended September 30, 2024, compared to $3.9 billion for the three months ended September 30, 2023, primarily driven by an increase in premiums ceded to Mt. Logan Re, Ltd. (“Mt. Logan Re”) cells within the Reinsurance segment for property catastrophe excess of loss line of business.”
A total of $235 million in written premiums were ceded to the Mt. Logan Re segregated accounts in the third-quarter of 2023, up significantly from the $89 million ceded in Q3 2023.
For the first nine months of 2024 that takes ceded written premium to Mt. Logan Re to $404 million, again significantly higher than the prior year periods $187 million.
Ceded earned premiums were also up, at $79 million for Q3 2024, compared to $74 million a year earlier, and $260 million for the first nine months of this year, compared to $172 million a year earlier.
Unsurprisingly, with premium cessions rising so much, ceded losses also increased to $44 million for Q3 2024, compared to $26 million for Q3 2023, and $107 million for the first nine months of 2024, compared to $79 million a year earlier.
Given the more elevated catastrophe loss environment in Q3 this year the increase in losses ceded is no surprise, but when viewed in relation to the growing premium cessions across which losses spread, the increase is not particularly significant it seems.
It’s clear from the reporting that Mt. Logan Capital Management, Ltd. (MLCM) and Mt. Logan Re are growing in importance for Everest, as third-party reinsurance capital management activities accelerate their growth at the company.
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