Analysts say collateralized reinsurance helps Montpelier Re grow

Analysts at Zacks have praised Bermuda reinsurance company Montpelier Re for strategic initiatives, including its collateralized reinsurance operations under the Blue Capital Management brand, which the analysts say have boosted the firms growth.

Blue Capital Management, the third-party capital and reinsurance-linked investment management arm of Montpelier Re, is one of the initiatives singled out for praise as a source of growth despite the declining trend in reinsurance pricing.

Zacks analysts said that despite competitive insurance and reinsurance market conditions, Montpelier Re has been able to grow its business in the first half of 2014, with solid contribution from the Montpelier at Lloyd’s operations and the firms collateralized reinsurance operations managed at Blue Capital.

The launch of Blue Capital Management has helped Montpelier Re by expanding its underwriting partnership business, with its range of collateralized catastrophe reinsurance linked investment products.

This is the kind of analysis that every catastrophe focused reinsurer that has ventured into ILS and collateralized reinsurance will hope to hear, that the initiative is seen as strategic, a source of growth and is not simply cannibalising premiums which could have gone on its balance-sheet.

Zacks analysts clearly feel that the Blue Capital Management collateralized reinsurance offering is augmenting the traditional offering that Montpelier Re brings to market, enabling it to put out larger lines, win new business, compete in areas where the balance-sheet is perhaps not the most effective source of capacity and providing the firm with a strategic avenue for growth.

With Montpelier Re also placing an increasing emphasis on its business at Lloyd’s of London it will be interesting to see whether the two strategic initiatives could come together one day to offer an ILS capital based product to the Lloyd’s market.