Lloyd’s of London underwriter Advent Capital Plc yesterday announced plans to form a Class 3 Bermuda reinsurer which will reinsure other reinsurers — an area known as retrocession, where supply has been short since the record 2005 hurricane season.

Advent Capital said in a statement yesterday that Bermuda-based Advent Re will have capitalisation of $37.5 million, drawn from a share offering of around $19 million and a debt issue of up to $20 million

Advent said Advent Re will be established as a Class 3 Bermuda reinsurer, subject to Bermuda Monetary Authority (‘BMA’) consent, and will use the parent company’s long standing relationships with clients and an experienced underwriting team in Brian Caudle and Duncan Lummis to underwrite its book of business.

Advent chairman Brian Caudle said: “The establishment of a Bermuda platform is an exciting development for Advent, allowing us to take full advantage of the favourable conditions being experienced in the retrocessional market in which Advent has historically specialised.”

Advent joins a number of other Lloyd’s underwriters who have either moved their domiciles to Bermuda or have set up subsidiaries.

Advent cited Bermuda’s less onerous capital requirements than the United Kingdom and quicker recognition of profit for capital purposes as key reasons for the move.

Advent Re is being created to take advantage of a lack of retrocessional capacity in the reinsurance market.

The statement added: “The Advent Directors do not expect the new capital which is currently entering the retrocessional market to be sufficient to put immediate and significant downwards pressure on retrocessional rates, in particular on business written as of January 1, 2007.

“In general, retrocessional rates continued to increase during 2006 as a result of the lack of capacity. Advent Re intends to take advantage of these attractive market conditions by underwriting a limited number of retrocessional contracts, predominantly as of 1 January 2007.”

Advent Re will initially be unrated,but the parent company said it will aim to obtain an appropriate rating from AM Best as it develops its reinsurance business over the next several years. Contracts underwritten by Advent Re will initially be fully collateralised in order to provide assurance to cedants of its financial strength, the stateent said.

Brian Caudle is stepping down as Director of Underwriting and as a director of Advent’s subsidiary, Advent Underwriting Ltd., to lead the development of the Bermudian platform as chairman of Advent Re.

Mr. Caudle remains as executive chairman of Advent. Duncan Lummis will be appointed as chief underwriting officer of Advent Re and Dermot Caslin will be appointed as Chief Financial Officer and Principal Representative in Bermuda.

Mr Caslin was the Chief Financial Officer of Tate and Lyle Reinsurance Ltd. (Bermuda) from 1991 to 2006.