The Royal Gazette, amongst others, reports on yet another new reinsurer in Bermuda, Castlepoint, which will provide QS cover for NY insurer, Tower:
Under a quota-share agreement with the new reinsurer, Tower will cede, or pass on, between 25 percent and 45 percent of its insurance premium and losses.
Tower, which is benefiting from market opportunities created by giant US insurer Allstate’s decision to curtail the number of policies it sells in the New York region, is the latest in a string of insurance companies to try to tap into expanding market opportunities by setting up a ‘sidecar’ reinsurer.
The Gazette piece also refers to the benefits of sidecar reinsurances in allowing the direct carrier to write more high-risk business.
In an interesting footnote to the piece, this caught my eye:
The Insurance Insider said Arlington, Virginia-based investment bank Friedman Billings Ramsey was raising Castlepoint’s funds through a private placement.
Friedman also handled the private placement, and later the public issuance, for Quanta Capital Holdings.
The bank is now advising Quanta on “strategic alternatives” after the insurer saw its business prospects called into question by a downgrade of its A.M. Best rating into the ‘B’ range earlier this month.
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