In launching its first collateralized reinsurance sidecar vehicle and engaging with third-party investors on the recently announced Lifson Re Ltd. launch transaction, Rob Berkley – President and CEO of W. R. Berkley noted the importance of a “shared sense of obligation and duty to capital.”
Insurance holding company W. R. Berkley Corporation announced its first foray into third-party reinsurance capital management with the set-up of a Bermuda based special purpose insurer (ILS) named Lifson Re Ltd. in late December.
Capitalised to the tune of $250 million, Lifson Re Ltd. is expected to act as a kind of property & casualty (P&C) reinsurance sidecar structure for the company.
Speaking during the companies fourth-quarter 2020 earnings call yesterday, President and CEO of the company Rob Berkley explained that there are two investor partners behind the Lifson Re sidecar structure.
“You may have picked up the announcement that we made just in time for 1/1,” Berkley said to analysts, further explaining that Lifson Re, “Is a vehicle that we created to sit side-by-side with our traditional reinsurance partners.”
“We remain very committed to traditional reinsurance,” he added. “But we felt as though that this was a good platform to sit side-by-side.”
On the backers supporting W. R. Berkley’s first reinsurance sidecar, he numbered them as just two.
“We’re very fortunate to have two outstanding partners in Lifson Re and while there certainly are plenty of people to partner with, these two institutions, not only are financially well-heeled, but they are two organisations that are both thoughtful and sophisticated, with tremendous expertise in the insurance industry, and they are truly partners,” Berkley said.
Which suggests the backers must be on the larger side of existing insurance-linked securities (ILS) investors or allocators, or perhaps from the private equity world which shows increasing interest in sidecar structures as a way to access reinsurance returns at this specific point in the market’s pricing cycle.
But importantly, W. R. Berkley was looking for close-alignment with the investor partners it welcomed into its first reinsurance sidecar structure.
Berkley explained, “It was very important to us that there’s a shared view around the topic of risk adjusted return, and a shared sense of obligation and duty to capital.”
Lifson Re Ltd. participates alongside W. R. Berkley’s reinsurance partners, accessing a broad portfolio of property and casualty reinsurance treaties ceded by W. R. Berkley subsidiaries on a fully-collateralized basis, starting January 1st 2021.
Find details of numerous reinsurance sidecar investments and transactions in our directory of collateralized reinsurance sidecars transactions.