In what appears to be a positive sign for its third-party investors, collateralized sidecar vehicle Mt. Logan Re has agreed to higher reinsurance premium levels in 2023, while losses ceded to it by parent company Everest Group have declined considerably.
As we recently reported, the third-party capital vehicle Mt. Logan Re Ltd. has a strong year for parent company Everestwith over $250 million in new capital raised and assets under management approaching $1.1 billion.
With more capital available, it appears that Mt. Logan Re’s management team has deployed more, leading to an increase in the premiums it receives via Everest divestitures.
For the third quarter of 2023, Everest ceded $89 million in premiums to Mt. Logan Re, compared to $68 million sold to the vehicle a year earlier.
For the first nine months of 2023, Everest has now ceded $187 million in premiums to Mt. Logan Re, again an increase from $150 million the previous year.
Signaling higher returns for investors in the Mt. Logan Re sidecar vehicle, the losses their capital will pay have decreased significantly this year.
Everest ceded only $26 million in losses and claims adjustment costs to Mt. Logan Re in the third quarter, down from the $99 million ceded to sidecar investors a year earlier.
For the year ending at the end of September, the amount of losses and LAE ceded to Mt. Logan Re totaled $79 million, again well below the 2022 figure of $161 million for the nine first months.
This suggests a significant improvement in Mt. Logan Re’s performance this year, while simultaneously strengthening its position as a source of third-party capitalized underwriting capacity for its parent company.
This also means that Everest’s fee income from Mt. Logan Re’s operations is also expected to increase.
The separate accounts guaranteed by Mt. Logan Re remain the largest source of retrocession capital for Everest, with $461 million in reinsurance recoverable for paid and unpaid losses attributed to the structure.