The first fund launched by Bermudian reinsurer Montpelier Re’s investment management subsidiary Blue Capital Management has provided an update on their progress after the January renewals. The Blue Capital Global Reinsurance Fund which launched and listed on the London and Bermuda stock exchanges on the 6th December last year has successfully deployed 58% of the capital raised at their share issue during the January reinsurance renewals.
The Blue Capital Global Reinsurance Fund raised $100.1m at its initial offering, with $50m coming from parent company Montpelier Re. $57m has been deployed to date through the Blue Water Master Fund Ltd., amounting to 58% of the initial capital raised.
In an announcement published today Blue Capital Management said that it was “Pleased with the pricing and diversification achieved in the initial deployment of the proceeds”, adding that this is inline with the targets set out in the initial offering prospectus. The Fund is targeting an annualised dividend yield of LIBOR plus 6% and a net return to Shareholders, made up of dividends, distributions and increases in the funds net asset value, of LIBOR plus 10% per annum.
Blue Capital has deployed the $57m of capital across 28 reinsurance contracts with diversification achieved by geographic location, peril and occurrence. It said that the majority of risk was deployed in the traditional reinsurance market.
Blue Capital intends to hold onto the balance of the raised capital to deploy at the next renewals in April, June and July and aims to be fully invested by the 1st July 2013. We imagine they may raise additional capital as well in the interim to put themselves in a stronger position when it comes to negotiating those renewals.
William Pollett, President of Blue Capital Management, commented; “We are very encouraged by the market reception to the launch of the Company and are pleased to report that we are on track to construct a diversified portfolio with attractive risk-adjusted return characteristics, consistent with the launch prospectus.”
Read our coverage of Blue Capital’s launch in these articles:
– Baillie Gifford takes 10% of Blue Capital Global Reinsurance Fund (11th December)
– Blue Capital Global Reinsurance Fund shares list on LSE (6th December)
– Blue Capital Global Reinsurance Fund raises targeted $100m (4th December)
– Blue Capital Global Reinsurance Fund launch details emerge (30th November)