Having increased the capital base of its Lifson Re collateralized reinsurance sidecar structure and raised the proportional quota share for 2025, W. R. Berkley ceded a significant 82% more in reinsurance and retrocession premiums to the structure in the first-quarter of 2025.
That represented a 10% increase over the prior year and the largest capital raise for the Lifson Re sidecar since its launch back in December 2020.
W. R. Berkley had launched the Bermuda based special purpose insurer (SPI), Lifson Re Ltd. for the 2021 underwriting year, with $250 million in capital raised from third-party investors for the sidecar.
Lifson Re stayed at $250 million for 2022, but then was upsized to $380 million for the 2023 underwriting year and then renewed again at the same $380 million for 2024.
Which reflects the increasingly important role the reinsurance sidecar has been playing for its owner, over the last few years.
When the Lifson Re sidecar launched it took up to a 22.5% quota share of the total amount of premium placed in any and all P&C reinsurance or retrocession placements, as long as more than one open market reinsurer is participating as a counterparty to W. R. Berkley.
That cession rate percentage, for the quota share the sidecar enters into with its parent, was increased to 30% as from July 1st 2022 and then increased again at January 1st 2025, to a 32.5% participation rate.
With more capital to deploy and a higher cession rate for the quota share, it’s no surprise to learn that W. R. Berkley ceded a meaningful increase in premium to the sidecar structure in the last quarter.
Recall that, for full-year 2024, W. R. Berkley ceded $417 million of premiums to its Lifson Re sidecar, which represented a slight decline on the $437 million ceded to it in 2023, but an increase on the $399 million of premium ceded to the reinsurance sidecar in 2022.
In the first-quarter of 2025, the company ceded $171 million in premiums to Lifson Re, a significant 82% increase on Q1 2024’s $94 million.
We believe this was the biggest ever single quarter of premium cessions to the sidecar by W. R. Berkley.
It might reflect, in some way, the fact that certain lines of reinsurance have now passed their hard market peak, with Lifson Re meaning the company can opt to leverage the third-party capital pool the sidecar provides, to maintain or keep growing market share with the capital support of the structure.
The collateralized reinsurance sidecar looks set to become an even more important component of the W. R. Berkley platform in 2025, with premiums ceded to the vehicle in Q1 almost reaching levels seen in half-year’s before.
Find details of numerous reinsurance sidecar investments and transactions in our directory of collateralized reinsurance sidecars transactions.
