The formation of a new British reinsurer - Wellington Re - could bode well for Bermuda as its holding company will be based on the Island and it is to cede some of its reinsurance to Bermuda-based Montpelier Re.

The Financial Times last week reported that Wellington Underwriting, a Lloyd's company had raised ?448 million ($655 million) to fund the new reinsurer, in the largest-ever private funding of a European financial services company. Private equity companies which have invested include Candover, 3i, Blackstone of America and Phoenix Equity Partners. Without mention that the new reinsurer would be held by a Bermuda-based holding company, FT reported: "The new reinsurer will start operating in June from a London base, bucking the trend of many new ventures that have recently based themselves in the Bermuda market."

A filing with the US Securities and Exchange Commission (SEC) by Bermuda-based Montpelier Re indicated however that Wellington Re's holding company would be based on the Island.

Wellington Re will be mainly owned by an investment consortium including Montpelier Re taking a stake in the holding company. In addition, Montpelier has agreed to provide quota share reinsurance to Wellington involving annual ceded premiums of approximately $60 million for the underwriting years 2003, 2004 and 2005. Wellington Underwriting has retained the right to take up to 28 percent of Wellington Re's share capital by 28 November. As part of Montpelier's funding and reinsurance commitments, CEO Anthony Taylor will join Wellington Re's board of directors. Prior to coming to Bermuda to join Montpelier, Mr. Taylor was deputy chairman of Wellington Underwriting.