Lancashire expands Accordion Re sidecar

Lancashire Holdings, the Bermuda and UK based provider of specialty insurance products, has announced that they have secured additional capital allowing them to expand their Accordion Re fully collateralised sidecar reinsurance facility. The Accordion Re sidecar was launched last May and focuses on property catastrophe retrocession. It acts as a quota share reinsurer for the Lancashire Insurance Company.

Lancashire have secured an additional $75m in capital from its existing Accordion investors and this will specifically be deployed for the 1st April Japanese reinsurance renewals. Lancashire says the new capacity will focus on the Japanese Interests Abroad (JIA) programmes where they have seen early indications are that ceding companies will be most in need of new solutions and capacity.

These Japanese renewals will be a focus of many of the collateralised retro vehicles as they offer an opportunity to write significant new business at good rates. Japanese, and Asian rates in catastrophe loss affected lines of business have seen significant price rises of as much as 50%. This gives convergence market vehicles a chance to secure business that will help them lift the returns they offer to investors. We fully expect other sidecar operators and collateralised reinsurers to have been capital raising with these renewals in mind.

Lancashire says that their underwriters have made recent visits to Japan to talk to cedants about their needs. They also note that the new $75m of capital will have the same draw down feature as the original seed capital that Accordion Re was set up with.

Richard Brindle the Group CEO of Lancashire said; “The flood losses in Thailand in 4Q11 have clearly had a dramatic impact on the Japanese market with net losses in the non-life market much greater than those sustained in the Tohoku earthquake and tsunami loss. We have spent a good deal of time speaking with both insurers and their intermediaries and believe we can offer them intelligent solutions to address their needs for a restructured product. We appreciate that this is a very difficult renewal for the Japanese cedants, and we are committed to working with them to provide the support that they need. Due to the excellent relationships that we enjoy with our Accordion partners we are able to deploy additional capacity at attractive returns in what we believe will be a challenging market for clients and brokers.”