PGGM / PFZW added $175m to Vermeer Re investment in Q3

Pension investment firm PGGM, allocating on behalf of end-client the Dutch pension fund PFZW, subscribed for an additional $175 million of shares in its RenaissanceRe managed joint-venture rated reinsurance underwriting vehicle Vermeer Re during the third-quarter of 2024.

The move shows the pension investors attraction to the current market opportunity, we suspect, with the increased scale now building the Vermeer Reinsurance Ltd. consolidated balance-sheet assets back to $2.2 billion at the end of September.

Vermeer Reinsurance Ltd. (Vermeer Re) was launched and began underwriting for the January 2019 reinsurance renewals.

The launch saw the RenaissanceRe Capital Partners division partnering with long-time insurance-linked securities (ILS) institutional investor PGGM and its client PFZW, with Vermeer Re becoming the first managed and ‘A’ rated reinsurance vehicle for a single pension investor.

The reinsurer has proven a very profitable route to access reinsurance-linked returns for the pension investor PFZW, with the investment in Vermeer Re having grown over time and by also rolling the income generated, Vermeer Re’s total balance-sheet had been as large as $2 billion in the past but has now grown further.

Earlier this year, Vermeer Re’s profitability for its backers became more evident, as in the first-quarter of 2024 PFZW benefited from a significant dividend from Vermeer Re, amounting to $175 million.

At the same time, for the first-quarter of 2024, Vermeer Re had generated almost $53 million of net income attributable to the pension backers of the reinsurance company.

Vermeer Re then generated $13.25 million of net income attributable to its backers for Q2 and a larger $73.5 million for Q3, taking nine-month income to $183 million, up on the $151.5 million of the prior year period.

Further demonstrating the profitability of this joint-venture reinsurance strategy for the pension investors.

While the $175 million dividend was taken earlier this year, it’s encouraging to see this additional $175 million investment made by PGGM for PFZW, as it shows the investors looking to deploy capital efficiently into reinsurance and recognising that Vermeer Re has a market opportunity ahead of it, so can benefit from the additional scale it seems.

At $2.2 billion as of September 30th 2024, the Vermeer Re consolidated balance-sheet assets are now up by $500 million in just one year.

Vermeer Re equity had reached $1.74 billion at that date, up from $1.49 billion at June 30th, reflecting the growth in the PGGM / PFZW investment in the vehicle as well as rolled profits.

It’s clear that, alongside the recent subscription for an additional $175 million of shares by the pension investors, PGGM and PFZW have continued to roll the profits generated by the reinsurer back into its balance-sheet firepower, helping to increase its scale and make it an even more meaningful player at reinsurance renewals as a result.

Vermeer Re continues to be right-sized for the current reinsurance underwriting opportunity by its investors and clearly continues to deliver attractive gains for PFZW’s investment into the reinsurance joint-venture.

Also read: PGGM / PFZW ILS portfolio returns 11.7% to end of Q3. AUM around US $8.6bn.