Brit grows Versutus sidecar to $150m with inclusion of binder risks

by Artemis on March 9, 2017

Global specialty insurance and reinsurance firm Brit Ltd. has increased the size of its reinsurance sidecar vehicle Versutus Ltd. to $150 million in order to accommodate coverage for its U.S. property binder insurance risks.

Brit renewed Versutus earlier this year at $110 million in size, as its typical quota share reinsurance arrangement with the collateralised sidecar renewed and increased in size by 33% for 2017.

Now the re/insurer has spotted an opportunity to include primary insurance risks within its sidecar, adding a $40 million portfolio of U.S. binder insurance to the vehicle, in a reinsurance arrangement that is retroactively effective as of the 1st January 2017.

Through its segregated accounts, Versutus will now deploy an increased amount of capital to collateralise its quota-share reinsurance arrangements with Brit, in order to cover the U.S. property insurance risks as well.

That takes the total size of Brit’s Versutus reinsurance sidecar to $150 million, at which size the coverage afforded to the re/insurer is becoming much more meaningful, as will be the fee income it generates through working alongside third-party investor capital.

Investors in the Verustus sidecar will benefit from a little diversification due to the differences between binder property portfolios of insurance business, versus property catastrophe reinsurance arrangements which have been the type of risks ceded to the Versutus vehicle to-date.

Of course the weather and catastrophe exposures will largely be the same, but the sources of business will now be broader and the inclusion of U.S. property insurance risks through binders may help Brit to further secure its market position in that space, which could result in more risk being ceded to the sidecar in future.

Christiern Dart, Chief Underwriting Officer of Brit, commented; “We are excited to expand access, through Versutus, to our North American Property Insurance portfolio of Binder business, the largest part of Brit’s broad product suite and an area where Brit is a market lead.”

Matthew Wilson, Chief Executive Officer of Brit, added; “We continue to broaden and enhance our capabilities within the capital markets arena, and this further expansion of Versutus is another positive development. This innovative structure builds on the platform we established to support our worldwide catastrophe treaty portfolio and, more recently, our launch of Syndicate 2988. We look forward to continuing to develop platforms with our third party capital partners that share and expand access to Brit’s strong underwriting management.”

By utilising third-party capital to support its property insurance business, Brit can benefit from efficient reinsurance capital which provides underwriting capacity support for this key business line, while also earning fee income as well.

GC Securities acted as placement agent for the $40 million of preference shares issued by Versutus.

For more details on reinsurance sidecar investments and transactions view our list of collateralized reinsurance sidecars.

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