International specialty insurer Chaucer plc has launched Thopas Re Ltd., a Bermuda domiciled fully collateralized reinsurance sidecar that will provide additional capital markets backed capacity to the firm’s Chaucer Syndicate 1084’s global reinsurance portfolio in 2018.
Chaucer is just the latest firm to look to third-party capital and ILS structures for a way to leverage the efficiencies of the capital markets to augment its underwriting capacity.
Vehicles like Thopas Re let insurers such as Chaucer secure reinsurance from the capital markets, on a fully collateralized basis, which ultimately serves to act as a capital lever and expansion of their underwriting capacity, at what can often be a lower cost-of-capital than the traditional markets.
Thopas Re Ltd. is a newly registered Bermudian segregated account company. Thopas Re has entered into an exclusive quota share reinsurance agreement with Chaucer, which will see it reinsuring a slice of Chaucer’s U.S. and international property catastrophe portfolio from Syndicate 1084, beginning January 1st 2018.
The arrangement includes $95m of third-party investor capital, Chaucer said, which suggests the Thopas Re sidecar could actually be larger than that if the firm has also put its own capital into it.
John Fowle, Chaucer CEO, commented on the Thopas Re arrangement, “This is a key development in the evolution of our business, providing us with greater scope and flexibility to support the evolving needs of our clients.
“Thopas Re increases the options available to us for both accepting and managing risk, while also introducing new capital market partners to our strong underwriting capabilities and international reach.”
“The creation of a reinsurance sidecar provides Chaucer and The Hanover with another means of leveraging our strong underwriting capabilities, and is a first step in creating new relationships with capital market partners,” added Jeffrey Farber, executive vice president and chief financial officer at The Hanover, Chaucer’s owner.
Reinsurance broker unit TigerRisk Capital Markets & Advisory acted as the sole structuring and placement agent on the Thopas Re Ltd. transaction, while Mayer Brown LLP and Appleby (Bermuda) Limited were the law firms on the deal.
For more details on reinsurance sidecar investments and transactions view our list of collateralized reinsurance sidecars.
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