Crosswinds Re, a total return strategy reinsurance vehicle established by Canadian asset manager Crosswinds Holdings Inc., is set to be dissolved along with the entire Crosswinds venture, as the reinsurer failed to find rates attractive enough at the renewals to underwrite any business.
Crosswinds, which is a publicly traded private equity investor and asset manager, established Cayman Islands reinsurer Crosswinds Re as a Class B(iii) reinsurer in September 2016, aiming to underwrite in the Florida property and casualty market to begin, as part of Crosswinds’ integrated insurance, reinsurance and asset management structure.
The strategy was total return, as Crosswinds sought the long-term reinsurance float assets to augment its own investment pile.
A year ago, Crosswinds Re was capitalised with $2 million for the mid-year 2017 reinsurance renewals, but no business was underwritten, as the asset manager parent said “the available opportunities did not meet its risk-return criteria.”
The same has been true at the mid-year 2018 reinsurance renewal, with the asset manager again explaining that it has not underwritten any business as it reviewed available reinsurance opportunities for the 2018 wind season but, “Determined that those opportunities presented to date did not meet its risk-return criteria. As a result, Crosswinds Re has not written any reinsurance business.”
Crosswinds Holdings said today that its Board has unanimously agreed that it is in the best interests of the firm to distribute all of its available capital (less a reasonable reserve for liabilities and contingencies) to shareholders and dissolve itself. If this is the route it takes then Crosswinds Re is to be dissolved as well.
Crosswinds will now seek shareholder approval to dissolve the firm, although it noted it is still open to any alternatives that come along.
The firm had put in place an arrangement with reinsurer TransRe, which was set to act as a strategic advisor to Crosswinds Re, providing information on structuring, pricing, risk assessment and market conditions for the reinsurance opportunities assessed by the company.
But still pricing has been deemed not atractive enough for Crosswind, despite the total return strategy which should have added efficiency.
It’s likely the scale that made the difference, as starting small in the current market would never be easy, no matter the strategy employed.
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