A new Bermudian reinsurance company has been formed by Renaissance Reinsurance Ltd. The new company called Timicuan Reinsurance II is essentially a sidecar vehicle set up specifically to create additional capacity for the Florida property reinsurance marketplace at the upcoming renewals.
RenaissanceRe say they have entered into a fully-collateralized reinsurance agreement with Timicuan Re II allowing RenaissanceRe to cede to Tim Re II a defined portfolio of its property catastrophe business, particularly it’s 2009 hurricane season risks. Tim Re II has been capitalised by investors with about $60m of capital including $10m raised by RenaissanceRe themselves.
Aon Benfield Securities assisted in raising capital for this sidecar vehicle while Willis Capital Markets & Advisory and GC Securities also acted as placement agents for Tim Re II.
We assume that this has been seen as a cheaper alternative to a catastrophe bond at this time for RenaissanceRe. It allows them to achieve the same thing though by offsetting some of their risks to the capital markets through investors.
Read the full press release on the Renaissance Re website.