Chubb's reinsurance ceded to ABR Re jumps 144% to $280m in 2016 - Artemis.bm Menu Search www.artemis.bm About Contact Advertise Privacy & Cookies Catastrophe bonds, insurance linked securities, reinsurance capital & investment, risk transfer intelligence. 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ABR Reinsurance Ltd. is Chubb’s captive or self-reinsurance vehicle, which it established in 2015 after an $800 million capital raise as a third-party investor backed, joint-venture reinsurer, with investment bank Blackrock providing a more active investment management strategy to deliver the total-return. The strategy benefits Chubb in a number of ways. It enables the insurer to retain more profit from the business it underwrites, while generating a higher return for that business through the total-return investment strategy and avoiding paying fees to cede that risk into the open market through a normal reinsurance renewal. So it’s no surprise to hear that the insurer is making increasing use of ABR Re, dramatically ramping up the premiums ceded to the total-return reinsurance vehicle over the course of 2016. In 2015, Chubb ceded $115 million of reinsurance premiums to ABR Reinsurance Ltd. and recognised ceding commissions of $30 million in the year. In 2016 the amount of reinsurance premiums ceded to ABR Re jumped by an impressive 144%, to $280 million, while the commissions more than doubled to $66 million. That’s an increasingly significant chunk of Chubb’s underwriting business that is working harder for the company, helping it to extract more of the risk premium from the business it has ultimately underwritten. The amount of reinsurance recoverable on losses and loss expenses that Chubb has via ABR Re also jumped in 2016, from $82 million at the end of 2015, to $148 million at the end of last year. Reinsurance premium payable increased significantly, from $6 million for 2015 to $53 million, which is possibly down to full-year reporting. ABR Re enables Chubb to realise more of the value it provides in underwriting risks, rather than giving it away in the third-party reinsurance process. At the same time the investment return generated by Blackrock ensures the risks ceded to ABR Re work harder, generate more profit which Chubb benefits from through its ownership stake and profit share. The insurers stake in ABR Re is 11% and the value of this increased from $94 million to $97 million during 2016, also generating increased value for Chubb. So ABR Re remains an efficiency and value play for Chubb, making its reinsurance cessions cheaper, its underwritten risk work harder, adding a total-return element, generating underwriting fees, commissions and profit share, all the while extracting more profit from the intellectual capital the insurer uses in its upfront underwriting. As a non-public facing reinsurer, ABR Re only takes risk from Chubb, it’s also a good strategy for the investors backing the vehicle, as it aligns them with Chubb’s underwriting and Blackrock’s investment, while helping them too to benefit from the added efficiency it creates for Chubb’s business. ——————————————————————— View all of our Artemis Live video interviews and subscribe to our podcast. All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online. Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more. ————————————— Share this page: Email LinkedIn Twitter Facebook Related Tagged as: ABR Reinsurance Capital Holdings, Alternative reinsurance capital, insurance, Insurance-linked investments, reinsurance, third-party reinsurance capital ← Older article Aon Hewitt helps Phoenix unwind its longevity swap Artemis Newsletters and Email Alerts Receive a regular weekly email newsletter update containing all the top news stories, deals and event information Name* Email Address:* Phone This field is for validation purposes and should be left unchanged. Submit Δ Receive alert notifications by email for every article from Artemis as it gets published. Email Address Subscribe Latest Cat Bond Deals Issuer $ Bellemeade Re 2022-2 Ltd. ≤$358m Radnor Re 2022-1 $238m Randolph Re 2022-1 $25m Finca Re 2022-1 $75m Isosceles 2022-C $19m View all catastrophe bonds. 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