LONDON (Reuters) ? Britain?s Hiscox said on Friday its Lloyd?s Syndicate 33 has struck a reinsurance deal with a Bermuda reinsurer funded by investors led by Wilbur Ross, allowing it to make the most of good underwriting conditions.

Newly established Bermudian reinsurer Panther Re was set up specifically to assume a 40 percent share of the Lloyd?s Syndicate 33?s property catastrophe reinsurance business for the 2007 underwriting year and a similar pro rata share to be agreed for 2008.

The deal, which is the first ?sidecar? transaction by a Lloyd?s insurer, will allow insurer Hiscox more capital to write a greater amount of reinsurance business in order to exploit currently attractive rates.

This year, reinsurers are set to make their best profits in years on the back of very high prices for catastrophe risks while US storm claims have been unusually low.

The positive pricing environment is expected to remain for the next few years. ?Creating access to more capital will allow us to take advantage of what we perceive will be a favourable market for writing catastrophe reinsurance business in 2007 and 2008,? Hiscox chief executive Bronek Masojada said.

Syndicate 33 will be entitled to a ceding commission and a profit commission based on the underwriting results of Panther Re, Hiscox said. It could earn between ?5 million and ?10 million ($9.8 million-$19.6 million) in profit share, Numis Securities analyst Nick Johnson said in a note, and could benefit from other potential cost and revenue synergies from the additional capacity provided by Panther Re.

?Panther Re gives Hiscox additional market presence, thereby potentially improving its flow of business and pricing power,? Johnson said. Hiscox shares were up 1.4 percent at 267.9 pence at 0845 pence, well ahead of the FTSE All Share index, which stood up 0.5 percent.

Reinsurers have increasingly turned to establishing such investment vehicles, known as sidecars, in an attempt to cash in on the high reinsurance prices currently on offer, without endangering their credit ratings.

Outside investors inject funds into the company while the reinsurer underwrites the risks and passes most of them to the vehicle. The reinsurer makes money through earning commissions based on how much business it provides for the sidecar and how profitable that business is.

Hiscox had said in September it was in discussions which could result in the creation of a reinsurer that would only reinsure its Lloyd?s Syndicate 33. Goldman Sachs acted as sole financial adviser to Hiscox.