Bermuda’s Argo Group has launched a niche reinsurance company using outside investor money, joining a spate of reinsurers looking to directly access capital market money to boost their earnings in catastrophe coverage business.The new sidecar, a Bermuda-domiciled special purpose insurer called Harambee Re, is the first sidecar established by Argo Group Holdings.Unlike other sidecars, which typically write either reinsurance or retrocession business, Harambee Re will underwrite both reinsurance and insurance business, the company said in a statement.The new sidecar will use investor money to underwrite around five percent of premium income for property portfolios for two of Argo Group’s businesses: Argo Re, the group’s reinsurance operation, and Colony Specialty, its excess and surplus lines segment, the group said.“Harambee Re enables us to grow the size of two of our core businesses without adding materially to the group’s exposure to the volatility associated with US earthquakes and hurricanes,” said Mark Watson III, president and CEO of Argo.Sidecars are set up as separate companies, where investors share the risks of certain policies with the reinsurer in exchange for a portion of the premiums. That gives them exposure to potentially lucrative business lines without diluting the company’s existing shareholders.Financial investors looking for assets less affected by the global financial crisis have grown increasingly interested in reinsurance, which provides coverage for insurance companies.Catastrophe reinsurance, which covers huge and costly natural disasters such as US earthquakes and hurricanes, is seen as uncorrelated to the performance of the wider financial markets.This is not the first time Argo Group has used investor money to support its reinsurance business. The company has sold two catastrophe bonds to capital market backers to access extra protection against hurricanes and earthquakes in the United States, windstorms in Europe and earthquakes in Japan.Catastrophe bonds allow insurers to pass on extreme risks, such as those related to earthquakes or hurricanes, to financial market investors, and are seen as an alternative to reinsurance.The launch of Harambee follows similar ventures launched by Renaissance Re, Lancashire Holdings and Alterra Capital Holdings in 2012.