Bermuda-headquartered AXIS Capital has teamed up with investor Stone Point to launch Monarch Point Re, a newly created collateralized reinsurer that has been capitalised by a more than $400 million raise and will operate as a kind of third-party capitalised casualty reinsurance sidecar structure, with a total return approach.
Way back in June we reported that two new examples of the collateralized insurer class of company had been set up in Bermuda, with Monarch Point Re (ISAC) Ltd. and Monarch Point Re (ISA 2023) Ltd. both registered by the regulator.
We reported at the time that these new entities appeared to have a possible link to specialty insurance and reinsurance company AXIS Capital, which now proves to have been correct as the company announces the launch and successful capital raise.
The launch capital raise of over $400 million of equity in Monarch Point Re includes a $75 million equity investment from a subsidiary of AXIS Capital and a $75 million equity investment from Stone Point Credit Adviser LLC.
Monarch Point Re will operate out of Bermuda and underwrite a diversified portfolio of casualty reinsurance business retroceded to it by subsidiaries of AXIS Capital.
Stone Point Credit will act as Monarch Point Re’s exclusive investment manager, with a diversified portfolio of corporate credit expected to be the target allocation, providing the total return approach that a longer-tailed liability ILS investment can deliver.
A multi-year reinsurance agreement underpinning the structure is effective from January 1st 2023 and subsidiaries of AXIS Capital anticipate retroceding around $400 million of reinsurance written premium for the first year of the reinsurance agreement, the company explained.
AXIS Capital said that the launch of Monarch Point Re reflects its “continued commitment to better serve its customers and distribution partners by expanding its capacity through third-party capital.”
Christopher Harris, the former CEO and President of Montpelier Re and Chairman of Blue Capital Reinsurance Holdings, has joined the venture and been appointed Chief Executive Officer of Monarch Point Re.
Harris is a recognised reinsurance industry leader, with a track-record in building out third-party capital capabilities and insurance-linked securities (ILS) funds.
Harris commented on the launch, “Monarch Point Re benefits from the specialty underwriting capabilities of AXIS and the investing expertise of Stone Point Credit, providing a tremendous opportunity to deliver value to the market and all of our stakeholders.”
In addition to Harris, Artemis can also report that Loic Grandchamp, AXIS Capital’s Head of ILS Asset/Liability Strategies and Ben Rubin, Managing Director at Stone Point Capital, are both set to take seats on Monarch Point Re’s Board of Directors.
Recall that Stone Point’s Rubin previously worked at AXIS and managed the firms third-party reinsurance capital activities, so has an established relationship with and understanding of the business.
“The launch of Monarch Point Re further demonstrates AXIS’s ability and desire to meet the needs of our customers and distribution partners by expanding our specialty reinsurance capacity,” added Vince Tizzio, President and CEO of AXIS Capital. “Moreover, in Stone Point Credit, we are partnering with an exceptional investment manager, which aligns with our alternative capital strategy of matching the right risk with the right capital.”
“We are excited to partner with AXIS to launch Monarch Point Re and bring together the expertise of the two firms,” Jim Carey, President of Stone Point further explained. “We believe Stone Point Credit’s experience managing capital for the insurance industry, combined with AXIS’s expertise in risk management, will enable us to generate substantial value for all stakeholders.”
It’s encouraging to see this use of Bermuda’s collateralised reinsurance structure as a vehicle that can operate as a kind of active sidecar for AXIS Capital.
Monarch Point Re brings third-party capital more directly to AXIS to extend its casualty underwriting firepower through a managed and regulated reinsurance underwriting vehicle, while also delivering the company a new source of fee income as well.
In addition, Monarch Point Re will provide casualty insurance-linked (casualty ILS) returns back to the investors backing it, as well as a total-return thanks to the Stone Point managed investment portfolio.
Stone Point itself has a track-record of backing reinsurance sidecar-like structures and investing into insurance and reinsurance risk, as well as its asset management prowess and benefits from the investment float and fee income as well, we assume.
Making this a promising partnership and an exciting launch for Bermuda and for the burgeoning casualty ILS space, as this shows a way larger insurers and reinsurers can leverage third-party investor capital within their casualty underwriting businesses.
For details of many reinsurance sidecar investments and similar transactions over the history of the ILS market, view our comprehensive list of collateralized reinsurance sidecars transactions.