ILS & hedge funds dominate 2015 Bermuda re/insurance registrations

For the first two months of 2015 insurance and reinsurance company registrations in Bermuda have been dominated by insurance-linked securities (ILS) focused vehicles and hedge fund reinsurance operations.

In January and February Bermuda saw 10 insurance or reinsurance company registrations. Of these four are special purpose insurers (SPI’s), largely dedicated to some form of ILS or collateralized re/insurance business it is to be assumed. Two hedge fund sponsored insurance companies were also launched during these months.

Bermuda has seen its insurance company registrations increasingly dominated by the formation of SPI’s for ILS and collateralized reinsurance business over the last few years. In 2013 the domicile saw 51 SPI’s registered, as the ILS market experienced rapid growth and the expansion of ILS fund managers. In 2014 the number slowed, but still finished the year at a very respectable 28 SPI’s registered in Bermuda.

The slowdown in SPI registrations was to be expected, as these vehicles are typically reused over a number of years for catastrophe bond issuances or even longer if utilised for other types of collateralized reinsurance deals.

However the fact that SPI’s remain the most frequently registered insurance or reinsurance vehicles in Bermuda clearly shows the growing importance of the role that collateralized structures and ILS play in the global reinsurance market, and more locally the Bermuda financial services landscape.

The SPI’s registered in January and February, along with details on their use where we have it, were:

• Centuriae Re Ltd. – a vehicle that is registered with Horseshoe Management in Bermuda, so a good chance it is a collateralized reinsurance or ILS vehicle of sorts. Artemis has tracked down an association between Centuriae Re and leading reinsurance brokerage TigerRisk Partners, as well as a connection to a fund structure under the name Centuriae Holdings Ltd. This suggests Centuriae is some kind of new ILS or reinsurance capital markets initiative. At this time we’re unsure if this is a TigerRisk Partners venture, or a vehicle they are structuring for clients.
• Valins I Limited – embedded value life insurance securitization from Aurigen Reinsurance.
• Securis Re LCM Ltd. – another special purpose insurance vehicle for London headquartered ILS manager Securis Investment Partners.
• Skuld II Reinsurance (Bermuda) Ltd. – something related to protection and indemnity (P&I) insurer Skuld it is assumed.

On the hedge fund reinsurance strategy front, another area of the evolving reinsurance market where Bermuda has excelled, two vehicles were registered in the first two months of 2015:

• Sandell Re Ltd. – a new Class 3A hedge fund strategy reinsurer backed by hedge fund manager Sandell Asset Management Corporation.
• Third Point Reinsurance (USA) Ltd. – the Class 4 reinsurance vehicle for Third Point Re’s U.S. expansion.

So convergence between reinsurance and capital markets (or asset management) continues to drive insurance and reinsurance registration activity in Bermuda in 2015. This trend is likely to continue, although given the re-use factor for ILS and collateralized SPI’s the volumes registered may not be much greater than last year.

Other registrations so far in 2015 are Class 1 Bluebird Reinsurance Company Limited, Class 2 Medocean Insurance Limited, Class 3 Brisk Insurance Company Ltd., Class C Nomura Americas Re Ltd. and broker Winkelvoss Ltd.

Also read:

– TransRe, Markel, others register sidecars, SPI’s in Bermuda in December.

– Special purpose insurer registrations slowed in Bermuda in 2014.