26 March 2013 Alternative Risk Transfer

PartnerRe joins sidecar club with Lorenz Re

PartnerRe has become the latest reinsurer to launch a so-called sidecar – a special purpose company the reinsurer will use to facilitate third-party investors to participate in collateralized reinsurance deals.

The deal is just the latest of this ilk to be completed by a reinsurer, further illustrating the much-talked about convergence between traditional reinsurance capacity and the capital markets. Some commentators have also suggested that having this ability is now something that shareholders in reinsurers look favourably upon.

Lorenz Re, which is domiciled on Bermuda, has been capitalised with $75m from investors via the issuance of a number of classes of preference shares. It will provide PartnerRe with additional capacity on various catastrophe reinsurance treaties over a multi-year period, allowing the company to tap into and leverage third-party capital.

“Lorenz Re allows us to provide additional capacity to a number of our clients while optimizing the deployment of our capital,” said Costas Miranthis, president and chief executive of PartnerRe. “Investors will benefit from PartnerRe’s twenty years of experience and expertise in the catastrophe market, as well as access to our diversified portfolio of catastrophe risks.”

Aon Benfield Securities acted as advisor on the transaction. Prime Management Limited, a Bermuda company specializing in the administration of investment funds and special purpose insurance vehicles, will serve as the insurance manager of Lorenz Re.

A number of similar initiatives have been launched in the past year. Montpelier Re is raising more money for its Blue Capital Global Reinsurance Fund while Lancashire Holdings recently launched Saltire Re I Limited, a fully collateralised Bermuda incorporated special purpose insurer with capacity of up to $250 million.

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