One of the first true reinsurance sidecars, Olympus Re Holdings Ltd, is being voluntarily wound up 14 years after it was created.

The pioneering firm was set up in Bermuda in 2001.

It was initially backed with $500 million in capital from investors that included Franklin Mutual Advisors, money managers Third Avenue, hedge fund Och-Ziff Capital Management, and some executives of White Mountains Insurance Group.

Olympus Re was among the first of a flurry of new companies established on the Island to fill an insurance capacity gap created in the wake of the 9/11 terrorist attacks.

It had a quota-share agreement with member companies of White Mountains.

Olympus Re took a near $100 million hit from insured losses incurred as a result of hurricanes Charley, Frances and Ivan in 2004.

Worse followed in 2005 when losses resulting from hurricanes Katrina, Rita, Wilma wiped out almost all of Olympus Re’s investments.

The late John Byrne, the-then chairman of White Mountains, who had put some of his own money into the sidecar, said at the time: “We have been wiped out. It gives me no great pleasure to say that.”

New investors were found. However, in 2006 further liabilities relating to losses from the previous year’s hurricanes threatened to finish off Olympus Re.

To prevent the new investors being wiped out, White Mountains agreed to reimburse nearly $140 million of claims.

Olympus Re proved to be a lesson in the dangers sidecar financial structures faced when their solvency was compromised by heavy losses from multiple disasters.

Mr Byrne, in a conference call in the summer of 2006, said of the sidecar enterprises that Olympus Re had pioneered: “The theory is still sound, but it’s been a sorry chapter.”

Olympus Re suffered ratings’ downgrades as a result of the 2005 losses.

On February 23 this year a general meeting of members of Olympus Re Holdings resolved that the company be wound up voluntarily.

John McKenna has been appointed as the liquidator.