Everest Re launches Mt. Logan Re third-party capital sidecar reinsurance vehicle

Another reinsurer is taking its first step into the third-party capital asset management arena by launching a vehicle dedicated to attracting investors capital to put it to use underwriting collateralized reinsurance business. Bermuda based Everest Re Group Ltd. announced the formation and launch of Bermuda domiciled special purpose reinsurer Mt. Logan Re, Ltd.  with $250m of raised capital at the end last week.

Everest Re has itself provided $50m of capital to help get Mt. Logan Re off the ground and have attracted around another $200m of third-party capital from investors reaching their initial target capitalisation of $250m. Mt. Logan Re will underwrite worldwide property catastrophe reinsurance business on a fully collateralized basis.

Joseph Taranto, Chairman and Chief Executive Officer, commented on the launch; “We are pleased to have Rick Pagnani join us as the Chief Executive Officer of this new venture. Rick brings a wealth of experience and is well-known within the Bermuda reinsurance community. Having successfully led prior reinsurance ventures, we are fortunate to have an executive of his caliber join us to launch this new operation.”

Pagnani has a strong track record in the reinsurance market and also capital markets convergence, making him an apt choice for the role. Most recently Pagnani was a Partner with TigerRisk, a broker focusing on catastrophe risk and active in the industry loss warranty (ILW) market. Prior to that he was CEO of Bermuda reinsurance startup Ascendant Reinsurance where the firm focused on catastrophe derivatives, before that he was with Quanta Reinsurance and even earlier major reinsurers Swiss Re and Zurich Re.

Mr. Taranto added; “For Everest, this vehicle adds yet another tool to our underwriting arsenal that allows us to meet the dynamic demands of the reinsurance marketplace and enhance the returns of our investors.”

Everest Re are the latest in a growing list of reinsurers who have shown interest in leveraging capital from third-party investors for writing collateralized reinsurance business. Whether in fund or sidecar form launches of these vehicles have always been a feature of the convergence market but 2013 looks like it could see more launches than a typical underwriting year as reinsurers take advantage of investor appetite for profiting from the returns that can be made from participating in reinsurance and catastrophe risk businesses.

Other recent sidecar and startup launches include: Lancashire with the launch of Saltire Re I, Alterra increasing the capitalisation of New Point V, RenaissanceRe with Upsilon Re II, Argo Group launching the innovative Harambee Re and Validus with their latest AlphaCat 2013 Ltd.