Voussoir Re Ltd. is a new collateralized reinsurance sidecar style vehicle which we understand to have been established by either Arch Capital itself, or the joint-venture run-off company it backs, Premia Holdings.
Voussoir Re Ltd. represents a new way that third-party capital is being brought within the Arch (or Premia) universe, as increasingly insurance and reinsurance firms bring the capital markets more deeply into their business.
If Arch linked, even via its stake in Premia, this would be the first reinsurance sidecar the firm has been linked with in some years. If solely linked to Premia, then it is the first capital markets vehicle linked to that firm.
The Voussoir Re Ltd. vehicle was registered in Bermuda as an SPI during November 2018. A holding company, Voussoir Holdings Ltd. was registered at the same time, suggesting there may be a little more to this than your typical collateralised reinsurance sidecar vehicle.
At this stage details remain scarce, but we understand from our sources that Voussoir Re is either directly linked to Arch itself, or directly to its run-off joint-venture business Premia Holdings. If Premia linked, then of course Arch will also benefit, given its relationship with the run-off player.
Arch invested in and provides capacity to Premia Holdings and reinsurer Premia Re, which was established as a new joint-venture alongside investor Kelso & Company targeting the property & casualty insurance and reinsurance run-off space.
Arch owns a stake in Premia through its investment, but also provides capacity through a reinsurance quota share between Arch Re and Premia Re, and also provides administrative and support services to Premia.
It is possible that this vehicle could even be an augmentation of the quota share reinsurance capacity that Arch provides to Premia.
Voussoir Re Ltd. has issued $74 million of Series 2019-1 participating notes in the vehicle to institutional investors, with the notes having a due date of March 1st 2022.
The capital raised from the sale of these notes will have been used to collateralize a portfolio of reinsurance business, potentially run-off business if it is indeed sponsored by Premia Holdings rather than Arch itself.
Little else is known about the underlying transaction or risks held by Voussoir Re Ltd.
Voussoir is itself an architectural term, meaning a tapered stone used within the construction of an arch, perhaps a hint at one of the firms behind it.
CFO of Premia Holdings Scott Maries is also listed as one of the Directors of Voussoir Re Ltd., which establishes the link to the run-off specialist firm. Maries also has a track record in capital markets related transactions and interest as well.
So it does seem likely that Voussoir Re Ltd. is a sidecar for run-off business, perhaps helping to boost the capacity of Premia Holdings, or free up some capital by sharing a quota share of its run-off portfolio with capital market investors.
If this proves to be the case then Voussoir Re could be the first pure run-off reinsurance sidecar vehicle, which as we explained in our article about R&Q earlier today is an attractive proposition for third-party investors.
We will update you should any further details about the Voussoir Re Ltd. SPI, or sidecar, come to light.
For more details on reinsurance sidecar investments and transactions view our list of collateralized reinsurance sidecars.
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