Validus launches AlphaCat Re 2012, Ltd. sidecar

Validus Holdings Ltd. are the second Bermuda based reinsurance group to announce the launch of a new sidecar vehicle for the 2012 hurricane season, see our earlier article on RenaissanceRe’s launch of Timicuan Re III here. Validus have announced the formation and launch of the latest in their AlphaCat sidecar series, AlphaCat Re 2012 Ltd. AlphaCat 2012 is a Bermuda special purpose reinsurer formed to write collateralized reinsurance with a focus on the hurricane risks in the Florida insurance market.

Validus announced that together with other investors they have capitalised and launched the new sidecar reinsurer AlphaCat Re 2012. The vehicle has been funded with $70m of equity capital, some of which comes from Validus themselves with the rest from outside investors, this is smaller than their AlphaCat 2011 vehicle which was capitalised with $180m. Validus Underwriting Services Ltd. will underwrite business for AlphaCat 2012 and will be paid a commission for originating business and a profit commission based on underwriting results.

Ed Noonan, Chairman and Chief Executive Officer of Validus commented; “AlphaCat 2012 reflects the continued expansion of Validus’ franchise in the important property catastrophe reinsurance market. We are very pleased to be able to provide additional capacity to our customers, and with the level of support for AlphaCat 2012 provided by investors and intermediaries.”

Again this is a prime example of an opportunity to capitalise on rates and capacity induced demand in the Florida homeowners market at the start of the hurricane season, while also capitalising on investor demand for access to reinsurance-linked investment opportunities.