Pension funding agency PGGM, allocating on behalf of end-client the Dutch pension fund PFZW, subscribed for an extra $175 million of shares in its RenaissanceRe managed joint-venture rated reinsurance underwriting car Vermeer Re throughout the third-quarter of 2024.
The transfer reveals the pension traders attraction to the present market alternative, we suspect, with the elevated scale now constructing the Vermeer Reinsurance Ltd. consolidated balance-sheet property again to $2.2 billion on the finish of September.
Vermeer Reinsurance Ltd. (Vermeer Re) was launched and began underwriting for the January 2019 reinsurance renewals.
The launch noticed the RenaissanceRe Capital Companions division partnering with long-time insurance-linked securities (ILS) institutional investor PGGM and its shopper PFZW, with Vermeer Re turning into the primary managed and ‘A’ rated reinsurance car for a single pension investor.
The reinsurer has confirmed a really worthwhile path to entry reinsurance-linked returns for the pension investor PFZW, with the funding in Vermeer Re having grown over time and by additionally rolling the earnings generated, Vermeer Re’s complete balance-sheet had been as large as $2 billion in the past however has now grown additional.
Earlier this yr, Vermeer Re’s profitability for its backers grew to become extra evident, as within the first-quarter of 2024 PFZW benefited from a big dividend from Vermeer Re, amounting to $175 million.
On the identical time, for the first-quarter of 2024, Vermeer Re had generated nearly $53 million of internet earnings attributable to the pension backers of the reinsurance firm.
Vermeer Re then generated $13.25 million of internet earnings attributable to its backers for Q2 and a bigger $73.5 million for Q3, taking nine-month earnings to $183 million, up on the $151.5 million of the prior yr interval.
Additional demonstrating the profitability of this joint-venture reinsurance technique for the pension traders.
Whereas the $175 million dividend was taken earlier this yr, it’s encouraging to see this extra $175 million funding made by PGGM for PFZW, because it reveals the traders trying to deploy capital effectively into reinsurance and recognising that Vermeer Re has a market alternative forward of it, so can profit from the extra scale it appears.
At $2.2 billion as of September thirtieth 2024, the Vermeer Re consolidated balance-sheet property are actually up by $500 million in only one yr.
Vermeer Re fairness had reached $1.74 billion at that date, up from $1.49 billion at June thirtieth, reflecting the expansion within the PGGM / PFZW funding within the car in addition to rolled income.
It’s clear that, alongside the current subscription for an extra $175 million of shares by the pension traders, PGGM and PFZW have continued to roll the income generated by the reinsurer again into its balance-sheet firepower, serving to to extend its scale and make it an much more significant participant at reinsurance renewals consequently.
Vermeer Re continues to be right-sized for the present reinsurance underwriting alternative by its traders and clearly continues to ship enticing positive factors for PFZW’s funding into the reinsurance joint-venture.
Additionally learn: PGGM / PFZW ILS portfolio returns 11.7% to end of Q3. AUM around US $8.6bn.
