Kinesis deploys over $250m into collateralised reinsurance at renewals

by Artemis on January 22, 2014

Kinesis Capital Management, a third-party capital management unit of global provider of specialty insurance and reinsurance products Lancashire Holdings, has underwritten over $250m of fully collateralised reinsurance contracts at the January renewals.

Kinesis Capital Management, which launched in  2013 as the new brand name for Lancashire’s third-party capital efforts, commenced underwriting fully collateralised reinsurance contracts using its Kinesis Reinsurance I Limited (Kinesis Re) Bermuda-based special purpose insurance vehicle for this renewals.

Kinesis Re’s parent firm Kinesis Holdings I Limited successfully raised capital from a panel of external investors, while Lancashire Holding’s itself contributed 10% of the capital raised. Using this third-party capital, Kinesis Re has underwritten its first tranche of multi-class reinsurance agreements with combined aggregate limits of over $250m. The collateralized reinsurance contracts underwritten incepted on or around the 1st January 2014.

Goldman Sachs worked with Lancashire to structure the Kinesis offering, which aims to allow investors to access the reinsurance market on both a regular and an opportunistic basis.

Kinesis offers a differentiated product range in the collateralized reinsurance space, which helps it to avoid the highly competitive property catastrophe areas of the market where reinsurance price softening has been most apparent. Kinesis offers its clients a unique and tailored, multi-class fully-collateralized reinsurance product, something not widely available from other ILS markets currently.

Richard Brindle, Lancashire’s Chief Executive Officer, said: “The successful launch of Kinesis, as a multi-class, fully collateralised reinsurance provider, is an exciting development in Lancashire’s third party capital management strategy. We have built an excellent team at KCM, led by Darren Redhead, which has strong underwriting skills and capabilities and this bodes well for future growth. Together, Lancashire, Kinesis and Cathedral constitute our three platforms to access different kinds of capital, all with high calibre, established underwriters. This approach allows us to provide brokers and clients with insurance and reinsurance solutions for all types of risk transfer requirements.”

Darren Redhead, KCM’s Chief Executive Officer, said: “We are delighted that the Kinesis vehicles are now fully established and funded and we look forward to continuing to develop KCM’s business and reputation in the Insurance-Linked Securities arena. We are very pleased with the start we have made, with the quality of the investors and clients, and are looking to develop further capacity and specialty class transactions during the year ahead”.

As a provider of multi-class reinsurance solutions on a fully-collateralised basis, the Kinesis core product is similar to Lancashire’s Saltire product and incorporates both aggregate elemental and non-elemental covers with expected losses of between 8% and 10%. It will also offer mid-year energy solutions using Lancashire’s distribution and pricing models and target post-loss marine and non-marine retrocessional reinsurance business, as well as potentially providing reinsurance and retrocession of Lancashire’s book itself on a multi-line basis.

Kinesis had targeted between $300m and $500m of funding for 2014, so with over $250m already deployed at the January renewals and other key points on the renewal cycle in April and June/July, it looks set to meet its goals.

More details on Kinesis can be found in these articles:

Lancashire to avoid the competition with collateralized Kinesis offering.

Lancashire focuses on building out multi-balance sheet platform.

Lancashire targets up to $500m initial funding for Kinesis Capital Management.

Focus insulates Lancashire from pricing pressure, announces Kinesis Capital Management.

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