Blue Capital Re explains 2014 reinsurance portfolio diversification

by Artemis on February 6, 2014

Blue Capital Reinsurance Holdings Ltd. (BCRH), the exchange listed collateralized reinsurance subsidiary of Bermuda reinsurer Montpelier Re, has given some more details on its deployment of capital within its 2014 underwriting portfolio.

Two weeks ago Blue Capital Re said that it had deployed $143m of the capital raised from its initial public offering into a portfolio of property catastrophe indemnity reinsurance contracts and related instruments at the 1st January reinsurance renewals. The $143m amounted to 89% of the firms total capital.

Now, in its latest update, Blue Capital Re said that it has deployed $144m, or 90% of its capital as of the 31st January and it has provided some more detail on the types of contracts underwritten.

Capital has been deployed to fully-collateralize reinsurance contracts of different types, to aid Blue Capital Re in constructing a diversified portfolio of catastrophe risks.

$61m of the firms capital has been deployed into first event covers, $57m has been deployed to collateralize catastrophe quota share contracts and the remaining $26m has been used to collateralize second and subsequent event reinsurance covers.

William Pollett, President and CEO of Blue Capital Re, said; “We were encouraged by the market reception to the launch of the Company and are pleased to report that we have already constructed a diversified portfolio of property catastrophe risks with attractive risk-adjusted return characteristics.”

Blue Capital Reinsurance Holdings said that it expects to deploy $160m of capital from its IPO over the course of 2014 and that it would retain approximately $14m of the capital to cover cash obligations, including its first three regular quarterly dividend payments, from its first year of operations.

Recently Blue Capital Reinsurance Holdings established a retrocessional reinsurance agreement with Montpelier Re subsidiary Blue Water Re Ltd., giving the Blue Capital Management and Montpelier Re third-party capital platform even greater flexibility in how it manages its portfolios of risk and augmenting the capacity of Blue Water Re to underwrite more reinsurance business itself.

Artemis also recently wrote that investment firm Baillie Gifford had taken a 7% share in Blue Capital Reinsurance Holdings.

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