Third-party investors participating in the underwriting of specialty insurance and reinsurance player Brit Ltd.have shared in fewer major losses, while taking a greater share of income through these activities in 2020, than in the prior year.Brit reported its results this morning and the use of third-party reinsurance capital from investors and insurance-linked securities (ILS) structures is increasingly embedded within the firm’s business activities.The company has somewhere over $440 million of investor backed capacity managed across its range of third-party capital activities, across its Versutus collateralised reinsurance sidecar, its Sussex Capital collateralised reinsurance fund platform and its Syndicate 2988 at Lloyd’s.

A number of important initiatives in recent years have helped Brit expand these activities, not least .With third-party reinsurance capital a key strategic lever for Brit, it’s interesting to see that the company shared fewer losses with its investors in these vehicles in 2020.In 2018, a year of heavier catastrophe loss activity, Brit shared $17.7 million of its major losses with third-party investors, but in 2019 that figure fell to just $3.2 million.

In reporting its results this morning the company reported that its third-party investors only took a $1.6 million share in its major losses during 2020.This is interesting, as Brit’s major losses for 2020 excluding COVID-19 were actually more than double the figure seen in 2019.But, with 2020 a year of frequency and smaller catastrophe events, such as the US hurricane landfalls, it’s possible that not as much of Brit’s third-party capital supported underwriting became exposed.

As usual, it’s not broken out how much of the losses fell to the individual buckets of third-party capital at Brit, so we can’t tell fell how much fell to the insurance-linked securities (ILS) vehicles specifically.But the reduced share of losses taken by third-party investors in 2020 reflects what appears to have been a more profitable year for the investors backing the Versutus and Sussex Capital ILS vehicles in 2020.This is also borne out in the reported figure for third-party investors share in Brit’s underwriting result during 2020, which came out at $6 million for the year, up on 2019’s $2.6 million.

This reflects some of the returns generated and delivered to investors in Brit’s ILS and collateralised reinsurance activities under Versutus and Sussex.After a better year of results in 2020 and with reinsurance rates having risen, we suspect Brit’s third-party capital backing for the Versutus sidecar and Sussex Capital ILS fund platform will likely have risen further for 2021.———————————————————————.All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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