NEW YORK (Bloomberg) — JPMorgan Chase & Co will manage funds for a new Bermuda-based reinsurer that raised $1.13 billion in capital, concentrating the investments in junk bonds.

JPMorgan’s Highbridge Principal Strategies LLC will oversee the assets for Watford Re Ltd, the reinsurer said on Monday in a statement.

Watford said it raised $907 million in common equity, including a $100 million investment by Arch Capital Group Ltd, and $226 million in preferred shares. The reinsurer is targeting an initial public offering in two to three years, chief executive officer John Rathgeber said in an interview.

The reinsurer’s portfolio will be “comprised primarily of non-investment grade credit assets, which it believes will generate attractive risk-adjusted returns for its shareholders over the long term,” Watford said.

Money managers including Dan Loeb have started Bermuda-based reinsurers in recent years to raise funds that are less subject to client withdrawals and can provide tax advantages. Pine River Capital Management LP, the hedge-fund firm founded by Brian Taylor, was seeking to raise $500 million to $750 million for a reinsurance company, a person familiar with the matter said in February.

JPMorgan, the largest US bank by assets, owns Highbridge through its investment arm, JPMorgan Asset Management. Highbridge Principal Strategies is led by chief executive officer Scott Kapnick, who came to the firm in 2007 after 21 years at Goldman Sachs Group Inc, where he was global co-head of investment banking. HPS had about $19 billion of assets under management as of March, Watford said.