LGT reinsurer Lumen Re gets reciprocal jurisdiction recognition in 37 states: AM Best

The loss ratio of Lumen Re, the main reinsurance underwriting vehicle of LGT ILS Partners, has reduced significantly again in 2023, while the reinsurer is becoming increasingly efficient for the ILS manager as it has earned reciprocal jurisdiction recognition in 37 US states, according to rating agency AM Best.

Affirming the ratings of Class 3B Bermuda based reinsurance company Lumen Re, at a Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) with stable outlooks, AM Best said that the company’s growth has continued.

AM Best noted that Lumen Re’s insurance license had to be upgraded to Class 3B in 2023 as it exceeded $50 million of net written premium in 2022.

In addition, it is notable that from January 2024 Lumen Re is now recognised as a Reciprocal Jurisdiction Reinsurer in 37 U.S. states, AM Best said, saying that this will reduce operational burden and costs for the reinsurer.

That will enable the LGT ILS Partners team to access and underwrite reinsurance directly in more locations, making the reinsurer an even more important lynchpin to its insurance-linked securities (ILS) investment operations.

Stating that Lumen Re’s operating performance is deemed adequate, AM Best explained, “The company’s derisking and reunderwriting process continues to be having the intended effect as the loss ratio has come down significantly in 2022 and again in 2023.”

Looking ahead, AM Best said that, “Lumen Re’s operating performance is expected to remain favorable given current market conditions,” saying that the reinsurer with its pricing sophistication, modelling capabilities and implementation of coverage exclusions for start-up companies, creates “a strong environment for management to execute its pricing strategy.”

Previously, we reported that Lumen Re wrote $51.1 million of net premiums written in 2022, up 29% from the prior year.

We had also reported that Lumen Re took onboard an external equity investor in 2022 as well, with US based investor The Kresge Foundation becoming an external equity investor in the reinsurance company.

Lumen Re sits at the heart of the LGT ILS Partners investment operations, providing an efficient way to access reinsurance risk premia, through a rated balance-sheet vehicle and with the jurisdictional recognition across many US states the company will only become a more efficient reinsurance origination structure for the investment manager.