Barbican begins writing collateralized reinsurance in Guernsey

Barbican Group, an insurance and reinsurance firm with a Lloyd’s focus but headquartered in Guernsey and backed by private equity investors, has launched a new Guernsey domiciled reinsurer which will focus on underwriting specialty business on a collateralized basis and will raise third-party capital, according to the firms CEO.

In Monte Carlo, David Reeves, Group CEO of Barbican Insurance Group, told A.M. Best TV about the launch of the new reinsurer and its intention to seek to grow the capacity it puts to work by raising funds from external investors. Reeves said that Barbican intends to work with alternative capital, aiming to bring new products to market, manage capital and earn fees.

Barbican likes the idea of being trusted with investors capital, bringing new and interesting products to market which can enhance its own capital returns and bring in fees. Barbican is going to apply this methodology across a range of new products in the future.

Reeves said that while alternative reinsurance capital is one of the major topics of discussion at the moment, Barbican see it as an opportunity to lower its cost of capital. Barbican will seek to take on third-party or new forms of reinsurance capital where appropriate if it will enable it to bring its products to clients in the market at reduced costs.

Reeves said that specialty insurance and reinsurance business would be the focus for its recently launched Guernsey based reinsurer, Barbican Specialty Re. It will focus on doing business that the firm cannot undertake in London and would not however offer any property lines, focusing on non-property classes of business where perhaps alternative capital has not had as much focus to date.

Barbican Specialty Re will write collateralized reinsurance business, beginning with a principal investment from the primary backer of Barbican Group investor Carlson Capital, but soon to include third-party capital from other investors. By going out to third-party capital Barbican believes it can increase the capacity of its new reinsurance entity while keeping the products it offers cost-effective and highly competitive in the marketplace.

Barbican has big ambitions for Barbican Specialty Re and Reeves said that at some point in the future it will seek to gain a rating for the reinsurer. That will prove an attractive proposition for third-party capital investors, who will see a way to gain returns from specialty business, which could diversify other investments in property catastrophe, but also help to back what may become a rated carrier in the future.

Barbican Specialty Re is already approved, licensed and operating in Guernsey and Barbican is actively speaking to clients about the offerings it brings to the market. Being non-property focused and offering collateralized reinsurance it should prove attractive. Reeves said that once a track record is nicely in place it would seek to turn Barbican Specialty Re into an A- rated insurer within a couple of years.

The Inisder also reported that Barbican is planning a marine focused re/insurance fund, which would be an interesting vehicle that could sit behind this collateralized reinsurer. It’s another good example of firms finding innovative ways to put alternative capital to work in new lines of business.

You can view the full interview from A.M. Best TV below: