New York and Cayman-based balance sheet reinsurer Northern Reinsurance SPC has raised an additional $50m investment in a recent fundraising round.

This investment takes Northern Re’s total committed capital raised to $75m.

The company intends to utilise the fresh infusion, which has tripled the company’s committed capital, to support its growth strategy.

The proceeds will further be used by the company to capitalise on favourable market conditions and allow it to expand partnerships with leading insurance companies.

The company, which officially started operations in January 2023, is mainly focusing on the high-frequency and low-severity casualty market.

In the near future, Northern Re intends to expand and establish as a provider of stable reinsurance capacity. It is targeting a total committed capital of more than $100m for next year.

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According to Northern Re, it uses a hybrid approach to deploy capacity to the conventional collateral model, which helps in splitting the capital stack both into the company surplus as well as in risk capital.

This collateral, which is posted in cash to ensure liquidity, is then invested in different qualifying, highly rated-fixed-income instruments.

Northern Re co-founder Peter McKelvy said: “This was an important decision we made early on in our lifecycle as we continued to evaluate how we could make process with our counterparties easier and more secure.

“We are extremely comfortable trading within guidelines of a trust, according to the state statutes or Credit for Reinsurance Model Act, and determined that cash would better meet the needs of our partners.”

The company also differentiates itself through an onshore balance sheet, Northern Reinsurance Segregated Portfolio Holdings.

Northern Re co-founder Anthony McKelvy said: “This distinction is important because it allows our carrier partners the visibility into additional risk protection relative to our overall portfolio size while providing them assurance that this capital is not committed to any individual premium trust.”