Global re/insurer Chubb ceded more risk in premium terms to its third-party capitalised total-return reinsurance joint-venture ABR Re in 2024, while the reinsurance benefits from recoverables due from the entity continued to build and investment fee income rose further.For full-year 2024, Chubb has reported that the ceded premiums written under transactions involving ABR Reinsurance Capital Holdings Ltd.and its independent reinsurer ABR Reinsurance Ltd.(ABR Re) rose to $476 million, up from the $441 million reported for 2023.

For Chubb, the ABR Re strategy provides aligned third-party capital supported reinsurance capacity, similar to a sidecar structure, but has an additional lever of an investment return delivered through the management of assets by joint-venture partner Blackrock.ABR Reinsurance Capital Holdings Ltd., the parent company, and ABR Reinsurance Ltd.(ABR Re), the reinsurance underwriting vehicle, as a total-return, or investment-oriented, reinsurance joint-venture in partnership with asset management giant Blackrock.

ABR Re acts as a significant third-party reinsurance capital vehicle for Chubb, having launched with around $800 million of capital sourced from third-party investors and the joint-venture partners themselves.Blackrock provides investment management services for the reinsurance vehicle, while Chubb cedes risk to ABR Re, and both of the JV partners earn a source of income from ABR Re, in terms of fees and profit shares.ABR Re acts an internal reinsurance vehicle and has a strict mandate to only underwrite risks ceded to it by Chubb, while it is said to follow market terms on that underwriting business as well.

Chubb benefits from a range of reinsurance market efficiencies that ABR Re generates for it.It allows the company to leverage a lower-cost of capital and a dedicated source of reinsurance capacity, which is third-party investor supplied, so is incremental to its own balance-sheet scale in terms of the limits it can deploy to clients.The asset management strategy of Blackrock further differentiates it and extends the benefits for Chubb, as ABR Re’s assets are invested differently to Chubb’s own balance-sheet assets, providing additional leverage for this portion of its business operations.

, the amount of business ceded to ABR Re fell slightly, reaching $441 million, which was down on 2022’s $507 million of premium.Overall commissions received by Chubb from ABR Re fell to $119 million for 2023, down on the $138 million reported for 2022.But, with premiums ceded to ABR Re rising again to $476 million in 2024, the commissions received remained relatively static at $117 million.

However, the importance of the ABR Re third-party capitalised total-return and sidecar-like strategy remains, as the reinsurance recoverable attributed to the vehicle rose again to $1.37 billion, having reached $1.241 billion at the end of 2023, up from $1.05 billion in 2022.Chubb’s ownership stake in ABR Re was static at just under 19% for 2024, no change to the prior year.Chubb last reported the carrying value of its stake in ABR Re at $151 million at the end of 2023, but there was no update on this figure in the recent annual results for the re/insurer.

But, the income earned by Chubb from reinsurance and investment management performance related fees earned via ABR Re rose in 2024 to $12 million, up from $8 million for the previous year.Chubb says it is “expected to benefit from underwriting profit generated by ABR Re’s reinsuring a wide range of Chubb’s primary insurance business and the income and capital appreciation BlackRock, Inc.seeks to deliver through its investment management services.” It’s clear that ABR Re remains an efficient and increasingly important third-party reinsurance capital strategy for Chubb.

it provides Chubb with a dedicated source of reinsurance capacity from third-party investors, alongside the flexibility and leverage afforded by an investment oriented underwriting approach, with fee income and commissions generated an additional benefit.ABR Re provides its third-party investors with a mechanism through which they can participate in Chubb’s underwriting-linked returns, on an aligned sidecar-like basis, while also offering total-return benefits thanks to the differentiated asset manager investment strategies..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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