International specialty insurance and reinsurance group Chaucer plc has renewed its fully collateralised reinsurance sidecar vehicle for 2022, adding new third-party investor capital to support its reinsurance underwriting at Lloyd’s, Artemis has learned.
Thopas Re Ltd. is a Bermuda domiciled fully collateralized reinsurance sidecar and we understand that the vehicle has issued a Series 2022-1 tranche of preference shares that were sold to investors.
We don’t have any visibility of the size of the 2022 Thopas Re sidecar issuance for Chaucer, but sources said it has downsized over other recent years, which aligns with the experience of many sidecar sponsors at the recent reinsurance renewals.
The Thopas Re sidecar was designed to provide additional capital markets backed capacity to the firm’s Chaucer Syndicate 1084’s global reinsurance portfolio.
Chaucer first created its Thopas Re collateralised reinsurance sidecar for the 2018 underwriting year.
That issuance was made more public and, for 2018, Thopas Re issued preference shares that were sold to third-party investors, securing some $95 million of third-party reinsurance capital backing for its Lloyd’s Syndicate 1084’s global reinsurance portfolio.
The Thopas Re sidecar structure was then more privately renewed for the 2020 underwriting year, with a Series 2020-1 issuance of preference shares at an undisclosed size.
We now understand from sources that Chaucer continues to make use of the sidecar structure and that the vehicle has been renewed again for 2022.
A new tranche of Series 2022-1 preference shares have been issued by Thopas Re and sold to investors, enabling them to participate in the performance of Chaucer’s Syndicate 1084 reinsurance book.
Sidecar vehicles, like Thopas Re, allow re/insurers like Chaucer to secure reinsurance for retrocession from the capital markets, on a fully collateralized basis.
Ultimately, this capacity serves to act as a capital lever and expansion of their own underwriting capacity, at what can often be a lower cost-of-capital than the traditional markets, while investors in the sidecar share in the profits and losses of a select book of business.
For more details on collateralized reinsurance sidecar investments and specific transactions, view our Directory of reinsurance sidecars.
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