Alterra Capital, the global insurance and reinsurance group, has announced the formation of a new sidecar vehicle designed to provide additional capacity for the property catastrophe collateralized reinsurance market. After the catastrophic start to the year additional capacity should be well received by market participants.
The sidecar, called New Point IV, is being formed in partnership with Stone Point Capital LLC, a private equity company who have in the past raised a significant $9 billion to make investments in financial services, through their Trident V LP equity fund. Alterra and Stone Point have both committed to put $100m each into New Point IV to capitalise the sidecar initially.
Marty Becker, President and CEO of Alterra stated; “We are pleased to announce the formation of New Point IV in partnership with Stone Point. Given the recent series of global catastrophic events, which have had the effect of reducing the capital supporting the international property catastrophe reinsurance market, we believe that this is a very timely addition of capacity.”
“We are excited to partner with Alterra on New Point IV. We know the Alterra underwriting team well and admire their track record of strong underwriting discipline and profitability”, said Charles A. Davis, CEO of Stone Point.
Alterra’s Vice Chairman and CEO of Reinsurance, John Berger commented; “Alterra has a history of successfully sponsoring sidecar vehicles and, with the creation of New Point IV, we believe we are well positioned to serve our clients’ needs as they seek property catastrophe reinsurance.”
We expect to see further capitalisation efforts from other reinsurance companies in the coming months as they try to provide capacity in alternative ways. Sidecar’s can be a cost effective way to provide capacity and utilise the expertise of the capital markets in their launch and management. The collateralized nature of this sidecar should be attractive to companies seeking additional capacity.