Phoenix CRetro launches to bring fresh capital to catastrophe retrocessional reinsurance

by Artemis on June 20, 2013

A new firm called Phoenix CRetro has launched targeting the catastrophe retrocessional reinsurance market while offering a way for institutional investors and capital providers such as re/insurers in Central and Eastern Europe (CEE), the Commonwealth of Independent States (CIS) which consists of countries formerly part of the Soviet Union and the Middle East & North Africa (MENA) to access the return of the reinsurance market.

Phoenix CRetro Reinsurance Company Ltd. is a Bermuda domiciled special purpose insurance vehicle and a segregated accounts company, which was registered with the Bermuda Monetary Authority on the 9th May. The head office of the firm is in Bermuda but it will operate a satellite office in London to be close to the Lloyd’s of London insurance market, from where most of its underwriting business will be sourced.

Phoenix CRetro is positioning itself as a ‘Bridge between catastrophe markets and the CEE, CIS and MENA’. It aims to act as both an aggregator and subscription market while bringing alternative, or third-party sourced, reinsurance capital from these often overlooked regions into the global catastrophe retrocesssion market.

Through Phoenix CRetro, re/insurance businesses such as Lloyd’s syndicates or global reinsurers will be able to access alternative capacity or capital from regions of the world which have historically had little involvement to the CAT retrocession market written on a worldwide basis.

Kirill Savrassov, Senior Vice-President and Chief Underwriting Officer of Phoenix CRetro, an experienced ex-USSR and London market professional dealing with collateralized business for the last 6 years and largely based in London told us; “As a single gateway we provide Lloyd’s Syndicates and global reinsurers with alternative capacity or capital from areas of the world with little previous exposure to CAT retrocession written on a worldwide basis – despite having the necessary infrastructure in place to enter the market.”

Phoenix CRetro sees an opportunity to help grow the global catastrophe retro market while offering a new source of return to both investors and companies in the CEE, CIS & MENA regions who would like to access catastrophe risk. It will also enable re/insurers from the region to access the catastrophe reinsurance market via Phoenix CRetro, which removes the challenges of financial strength, local ratings and size of single capacity.

Savrassov said; “We are a specialist reinsurance platform bringing Lloyd’s and the international catastrophe reinsurance market together with insurers and capital providers from the CEE, CIS & MENA regions.”

For ceded reinsurance buyers Phoenix CRetro aims to offer a new and alternative source of capacity, ever important these days when diversifying your sources of risk transfer is essential. It will offer whole account and CAT XL protection on either ultimate net loss (UNL) or quota share basis’, with line sizes of up to £10m per contract with 60 days’ notice or £50m with 120 days’ notice.

The retrocessional contracts will be backed by covers or capital from either insurance or capital markets sources that currently have minimal exposure to the catastrophe reinsurance markets. By acting as an aggregator and arranger of turnkey retro cover, Phoenix CRetro will enable a single common transaction instead of working with numerous companies or capital providers in the region.

All of the retro cover sold by Phoenix CRetro will be fully-collateralised, using either a collateral trust account arrangement with leading banks or letters of credit from leading banks.

Due diligence on capital providers is said to be rigorous, with a two pillar approach that sees Phoenix CRetro and its partner banks both ensuring that transparency and compliance exists in any relationships. The results of these diligence checks are available for clients to view.

For capital and capacity providers Phoenix CRetro offers a chance to access some of the highest returning areas of the global catastrophe reinsurance markets.

Phoenix CRetro will target insurers and reinsurers in the CEE, CIS, MENA regions who want to broaden their scope into global retro but will also target third-party capital providers who it can also accommodate. It will target banks, asset managers, hedge funds, pension funds and high net-worth investors to bring them into single contract transactions such as Quota Share or CAT XL reinsurance treaties using clearly segregated account arrangements.

Savrassov told us; “As an investor we can offer you a structured and robust framework to invest in a dynamic and fresh market. We use an aggregation business model allied to properly structured instruments to give you a unique offering.”

Phoenix CRetro is managed by R&Q Quest Management Bermuda.

This is a very interesting business model which has the potential to bring significant sums of new capital into the global catastrophe retrocessional reinsurance market from new sources. By targeting capital in areas often overlooked by the reinsurance market, Phoenix CRetro will be offering clients access to new, diverse sources of capital and capacity that they perhaps will not have had any access to before.

For investors in the regions of the CEE, CIS and MENA, Phoenix CRetro will offer an interesting way to gain access to some of the highest returning segments of the global reinsurance markets, which should prove attractive in regions where there can be significant capital available.

By matching the ambitions of those capital sources and investors with the retrocessional risk transfer needs of large reinsurance groups and Lloyd’s syndicates, Phoenix CRetro could create an entirely new source of capacity within retrocessional reinsurance and as a result add strength and capacity to the global catastrophe reinsurance market.

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