Ledger Investing launches $100 million casualty sidecar facility with reinsurer

Ledger Investing has announced the successful launch and funding of a new casualty sidecar facility, which will provide up to $100 million in capital to support the casualty reinsurance business of a global reinsurer over three underwriting years. The capital will be deployed on a quota share basis.

Ledger Re SPC, a Cayman-based subsidiary of Ledger Investing that offers institutional investors access to casualty insurance-linked securities (ILS), served as the retrocessionaire for the facility.

Samir Shah (pictured above), CEO of Ledger Investing, stated that the development marks an important step as the company expands from primarily securitizing managing general agent (MGA)-originated portfolios to supporting the long-term capital management of leading reinsurers.

“Our experience in capital modeling and structuring was instrumental in developing a flexible and sustainable solution that created value for both sides,” Shah said.

The transaction comes at a time when reinsurers are expected to seek double-digit increases in US casualty premium rates during the January 2025 renewals, according to Fitch Ratings.

This expected move aims to counter rising loss costs driven by social inflation, which has been a key factor in adverse loss development trends within the US casualty sector. Fitch noted that these trends present a significant risk to the global reinsurance market, contributing to its neutral outlook for the sector.

Negotiations with cedants are expected to be challenging, as reinsurers contend that the rate increases seen in 2024, which reached up to 15% for loss-affected accounts and 10% for no-loss accounts, were insufficient to address rising costs.

Alex Freiberg, CEO of Ledger Capital Markets, highlighted the growing interest from investors in casualty ILS, noting that the capital efficiencies provided by these products are driving demand from reinsurers.

“The capital efficiencies enabled by casualty ILS are driving a growing demand for these products by re/insurers,” Freiberg said.

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