Argo Re Ltd., the Bermuda reinsurance arm of international specialty insurance and reinsurance firm Argo Group, is joining forces with specialist insurance-linked securities service firm Horseshoe Group to offer ILS fronting services to the market.
Argo Re has entered into an agreement with Horseshoe Re Limited which will see the pair offering fronting arrangements to ILS funds and other investors seeking to deploy capital into reinsurance contracts. The use of a fronting carrier allows third-party capital to participate in collateralized reinsurance contracts using the rated paper of the carrier.
This service is becoming increasingly important in the ILS market, where investors are seeking to access direct reinsurance risks through collateralized deals in growing volumes. By joining forces with Horseshoe Group, already a leader in ILS transformation and management services, Argo Re will be able to profit from fronting arrangement fees to add to its own reinsurance income.
Argo Re sees the opportunity as expanding its reinsurance product offering to meet the expanding needs of the insurance linked securities market, enabling it to provide reinsurance services to capital that would otherwise be competing with it to some degree.
Horseshoe Re is already a leader in servicing ILS funds and capital market investors risk transformation needs, this partnership will build on that expertise and Argo Re’s depth of underwriting experience and financial strength, creating a seamless link between the reinsurance and capital markets.
The fronting platform will provide ILS fund managers and other capital market investors with a flexible and efficient platform to participate in reinsurance programs that require coverage from highly rated reinsurance carriers, the announcement released today said.
“Given the limited number of reinsurers available to support programs at this level in the ILS market, we saw an opportunity to address this need,” commented Horseshoe Group CEO Andre Perez. “Argo Re’s expertise in worldwide catastrophe reinsurance underwriting coupled with Argo Group’s financial strength makes them an ideal partner.”
“We are delighted to strengthen the long-term trading relationship we have developed with the Horseshoe Group in search of ever more effective reinsurance solutions for our mutual customers,” stated Argo Re President Matthew Wilken.