Allied World takes stake in collateralised reinsurer Aeolus
Allied World Assurance Company has bought a minority stake in Aeolus Capital Management in an effort to expand its financial services platform.
Allied World will also increase the amount of capital it deploys in the reinsurance and retrocession market through Aeolus.
Aeolus Capital is a privately owned, Bermuda-based asset management company that manages capital on behalf of investors seeking to invest in the property catastrophe and retrocessional reinsurance.
“We have been working with the Aeolus team for some time in the collateralised reinsurance market and have great respect for their capabilities, expertise and track record,” said Scott Carmilani, president and CEO of Allied World.
“It is a very efficient way to consistently deliver optimal returns, and I firmly believe Aeolus’ platform for managing capital to be the property cat model of the future. We are excited about this partnership and how it will work to complement both entities’ overall portfolios and returns.”
“This is the third transaction that we have announced since launching Allied World Financial Services Company earlier this fall,” said John Gauthier, president of Allied World Financial Services. “Aeolus is a highly attractive investment for us given its strong track record of managing collateralised reinsurance assets, the level of service it provides to its investors and cedents, and the highly experienced management team.”
Aeolus Capital Management was founded by Peter Appel, a founder and former president and CEO of Arch Capital and David Eklund, former president and chief underwriting officer of Renaissance Re.
Aeolus Capital and its wholly owned subsidiary, Aeolus Re Ltd, and affiliated entities, are the successors to the business of Aeolus Reinsurance Ltd, a Bermuda-based reinsurance company founded in 2006 by Messrs.
Aeolus Capital’s assets under management have grown to over $1.7 billion, and since 2007, Aeolus and its predecessor have provided over $12 billion of capacity to its cedents.
“In addition to providing Aeolus with a substantial, longer term capital commitment our cedents can rely on, this transaction allows us to bring into the fold a very knowledgeable and collaborative partner who can provide us with invaluable insight and additional resources as we continue to expand our presence in the property catastrophe market,” said Peter Appel, chairman and CEO of Aeolus Capital.
“Allied World’s strong commitment to Aeolus provides real validation of our overall approach to the reinsurance and retrocession market and will serve our investors and cedents well.”
Allied World, which was advised by Berkshire Capital Securities on the deal, will extend its capital commitment to Aeolus for at least three years from the start of 2013.