A new insurance company being sponsored to proved capacity to Bermuda-based Renaissance Re has been assigned a debt rating by Standard & Poor?s.

Starbound Reinsurance Ltd., a so-called ?sidecar? incorporated in Bermuda earlier this month, was established to provide reinsurance to RenRe.

Under a quota-share agreement, RenRe can cede, or pass, on 80 percent of the premium from specific property catastrophe business.

S&P, which assigned an ?A+? debt rating to an unsecured bank loan for $50 million and lower ratings on loans for an additional $140 million, said Starbound was formed to do business specifically with RenRe, and that about three-quarters of the risks spread to Starbound will be Florida-based.

The concentration of risk was a ?minor negative rating factor? said S&P. Weather forecasters are predicting another active hurricane year, after record activity last year.

Starbound is at least the tenth ?sidecar? to be formed in Bermuda since last year?s Hurricane Katrina wiped as much as $40 billion from insurance balance sheets.

The structures, which are set up as separate entities backed by outside investors, allow insurers to continue selling high-risk policies in the currently high-priced market, while reducing the possibility that losses will take a bite out of capital.

Investors, who have poured some $2.5 billion into these structures in recent months, have the benefit of being able to put money into the market when prices are rising while also being able to readily withdraw from the low-infrastructure companies as market conditions soften.

Starbound may borrow up to $190 million from a consortium of banks for a term of about 1.75 years, said S&P.

The entity is to be capitalised with $125 million. As is customary with a sidecar, funds are being put in trust to cover the risks that Starbound takes on from RenRe.