Blue Capital Management, the third-party capital and reinsurance-linked fund management arm of Bermuda based reinsurer Montpelier Re and manager of the Blue Capital Global Reinsurance Fund Limited, said Friday that it would target up to $100m in its latest capital raising share placement.
Blue Capital proposed a new placing of shares in its flagship listed reinsurance-linked investment fund, the Blue Capital Global Reinsurance Fund Limited, just over a week earlier. The second placing of shares from its placing programme, Blue Capital said on Friday that it would issue up to $100m of new shares in this second placing.
The reason for putting a maximum on the placing is that Blue Capital Management wants to ensure it can deploy all of the capital it raises at the forthcoming reinsurance renewal season. The fund has cash allocation targets within its investment policy, meaning that it will attempt to keep a certain amount of its assets fully invested at any one point in time.
By limiting the capital it raises to $100m or less, Blue Capital will find sufficient opportunities to deploy capital into collateralized reinsurance contracts within a reasonable timeframe after raising the money. With competition high in the reinsurance market right now this is a sensible approach as there is no point raising too much capital and finding deployment difficult, ending up with cash not invested or even having to deploy it into contracts which may not be as suitable.
The proceeds from Blue Capital’s second share placing will be invested in fully-collateralized reinsurance-linked contracts and other catastrophe reinsurance-linked investments. Blue Capital expects the majority of the proceeds will be invested at the January renewals.
The additional cash will allow Blue Capital to take larger line sizes at the renewals, find new counterparties to further diversify its book of business, build more diversification categories and will generally give the firm more weight at the reinsurance renewal negotiations.
The results of the placing should be made available around the 23rd October and the resulting shares are due to be listed around the 28th.
We’ll update you when the results of the placing are published.