Side-cars offer diversification and capital benefits

The trend of insurers and reinsurers offering alternative forms of capacity to the market through the use of structures such as side-cars is as much about carriers seeking diversification and better uses of their capital as it is about seeking short-term returns for investors.

A number of carriers have launched such vehicles in the London Market of late. Montpelier Re is just one of several Bermuda-based companies to reportedly form new third party fund managers and side-cars in London while Lancashire Holdings will shortly launch Saltire Re I Limited, a fully collateralised Bermuda incorporated special purpose insurer with capacity of up to $250 million.