investment oriented reinsurer

Watford Re, the investment-oriented, total return reinsurance joint venture run by Bermudian re/insurance group Arch Capital alongside asset manager Highbridge Principal Strategies, is planning to expand its operations in Europe with a move into the  Romanian insurance market, according to a report.

The joint-venture legacy or distressed run-off and commutation insurance and reinsurance entity formed by total-return reinsurer Sandell Re and legacy specialist SOBC Corp. has entered into a new acquisition, purchasing 100% of the stock of American Safety Risk Retention Group, Inc. of Vermont.

Insurance and reinsurance specialist Enstar Group has confirmed that its total return reinsurance vehicle KaylaRe Ltd. softened the blow from third-quarter hurricane catastrophe losses, as the firm said that its quota share agreement with KaylaRe reduced the impact by $22.7 million.

AXIS Capital Holdings’ strategic capital partnership activities generated increased fee income for the re/insurer during the first nine months of 2017, as a decrease in profit commissions related to retrocessional agreements in Q3 was offset by more than $9 million in service fees and reimbursement of expenses to its reinsurance segment.

The retrocession market has helped Bermudian re/insurer AXIS Capital to reduce its losses from third-quarter catastrophe events, including hurricanes Harvey, Irma and Maria, as well as the Mexico earthquakes, to $578 million, with the firm set to claim $136 million back from retrocessionaires.

Total return reinsurance vehicle KaylaRe Ltd. is set to lessen the impact of recent hurricanes for its sponsor, insurance and reinsurance specialist Enstar Group, shouldering a portion of the group’s losses through its quota-share with StarStone.

Total return reinsurance vehicle KaylaRe Ltd. has driven higher fee income again for its sponsor, insurance and reinsurance specialist Enstar, as the strategy begins to acquire scale, as cessions made to KaylaRe build up and the investment float continues to accumulate.

The total return reinsurance model, or investment oriented reinsurance model, or hedge fund backed reinsurance model (depending on what you prefer to call it), remains a challenging strategy to execute on well, but more recent start-ups that are sponsored by an existing re/insurer and asset manager are favoured by S&P.

Arch Capital Group’s part-owned total return reinsurance vehicle, Watford Re, experienced losses of more than $110 million in the second-quarter of 2017, reducing the income it passed onto its third-party investors when compared with the previous year’s quarter.

During the second-quarter of 2017 Bermuda-based insurer and reinsurer, AXIS Capital Holdings, noted the continued positive momentum it sees in its strategic capital partnership activities, recognising increased fee income and ceding more premiums to third-party capital in the period.