The Harambee Re collateralized sidecar has been renewed for 2015, by international specialty insurance and reinsurance group Argo. This year Argo has changed its sidecar strategy, as Harambee 2015 will only feature reinsurance business.
Argo launched its first Harambee Re fully-collateralized sidecar vehicle in 2013, Harambee Re 2013-1 Ltd., as the re/insurer sought to bring some third-party capital into its underwriting businesses. Argo was already active in using collateralized capacity and the capital markets with its Loma Re catastrophe bond issuances, but this was its first sidecar.
Harambee was unique as it was the first sidecar vehicle which provided capacity for both an insurance portfolio as well as a reinsurance portfolio of business. In 2013 Harambee provided capacity 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.
In 2014 Argo renewed Harambee Re, using a new vehicle Harambee Re Ltd. which allows for multiple issuances out of the same structure. The Harambee Re 2014 sidecar followed the same insurance and reinsurance strategy as in 2013, providing capacity for the firms Bermuda reinsurance operation Argo Re and its excess and surplus lines specialist arm Colony Specialty.
For 2015 though Argo has changed strategy to focus solely on ceding reinsurance business to Harambee Re Ltd. in 2015. Argo wouldn’t disclose any more details about the size of the vehicle for 2015, as it has declined to do in previous years as well.
An Argo spokesperson told Artemis that the re/insurer has launched a Harambee 2015 reinsurance sidecar, with the Harambee vehicle allowing for multiple issuances now, giving Argo an option to use it when the right opportunities present themselves to partner with third-party investors.
For 2015, only reinsurance business will be ceded to the Harambee sidecar, which perhaps reflects the changing market conditions. It’s possible that Argo would rather hold the specialty property insurance business itself rather than cede it to the sidecar, with third-party capital being best put to use in the reinsurance market.
Argo continues to show that it is keen to put third-party capital to work within its underwriting business, as well as to leverage the capital markets for risk transfer through its Loma Re catastrophe bond series.
The use of sidecars as underwriting companion vehicles continues to be prevalent in 2015, with a number of regulars being renewed and often upsized for the 2015 underwriting year. This trend is expected to continue and it will be interesting to see whether more launch or grow for the key mid-year U.S. property catastrophe reinsurance renewals.