International insurer and reinsurer Argo Group has announced the launch of a sidecar with a difference today. Argo has established Harambee Re 2013-1 Ltd., a Bermuda domiciled sidecar vehicle, which will provide capacity for the 2013 accident year. It is the first time Argo Group have launched a sidecar, expanding its use of collateralized capacity and the capital markets which it already taps into with their Loma Re catastrophe bond issuances.
Typically sidecars write reinsurance or retrocession business but Harambee Re is a sidecar with a difference because, according to Argo, it is the first sidecar vehicle which will provide capacity for an insurance portfolio as well as a reinsurance portfolio of business.
That’s particularly interesting as it demonstrates a way to put collateralized capacity to work writing primary insurance business. This could be of great interest to certain investors looking to diversify away from reinsurance and to insurers looking to broaden their capital bases and take advantage of flexible sources of capital markets capacity.
Argo Group said that Harambee Re will provide capacity of approximately 5% of premium income for specific property portfolios from two of its core businesses; its Argo Re reinsurance operation and its excess and surplus lines specialist arm Colony Specialty.
Argo Group President and Chief Executive Officer Mark E. Watson III commented; “We are pleased to support our business growth objectives with this new funding vehicle. Harambee Re enables us to grow the size of two of our core businesses without adding materially to the Group’s exposure to the volatility associated with US earthquakes and hurricanes.”
Other recent sidecar launches include: Lancashire with the launch of Saltire Re I, Alterra increasing the capitalisation of New Point V and RenaissanceRe with Upsilon Re II.