French reinsurance company Le Mans Re capitalised at $162.5 million.

XL signed a joint venture agreement with French mutual company Les Mutuelles du Mans Assurances Group to set up the new company to operate from headquarters in Le Mans, France.

Its executives aim to propel the start-up into the market to quickly snatch up business and become one of the major European reinsurers over the next five years.

The Royal Gazette can reveal XL handed over almost $100 million to Le Mans for a 49 percent shareholding in the new company.

Their French partners gave the 40-year-old operations of its reinsurance division, Mutuelles du Mans Reassurance, to gain the majority stake in the start-up.

On January 1 XL's new partners had net premiums in force of $228.5 million -- which were later transferred to Le Mans Re -- for property, life and accident, motor and casualty risks.

Le Mans Re now has almost 100 staff in its headquarters and offices in Toronto, Singapore, Miami and Sydney.

But the deal is still subject to the usual regulatory approvals.

If it's given the green light, key figures from XL's wholly owned subsidiary XL Mid Ocean Reinsurance Ltd. will take four of the nine seats on the board of directors for Le Mans Re.

XL Mid Ocean Re president and CEO Henry C.V. Keeling said: "Le Mans Re gives XL Mid Ocean Re immediate access to continental Europe, which is the second largest reinsurance market in the world after the US.

"Establishing XL Mid Ocean Re in this market, where we have had a limited presence until now, is a key element in our global strategy.'' He said the start up would boost client connections and provide a "mature book of European business'' that would otherwise have taken years to develop.

Le Mans Re general manager Jean-Luc Bourgault said the goal was to push the start-up into the market where it would become a "strategic alternative'' to the large reinsurance companies operating in Europe.

"We believe that the new company's capacity and capital strength will provide a solid foundation for Le Mans Re to achieve its objective of becoming one of the major European reinsurers over the next five years,'' he said.

Le Mans Re has received an A-minus rating from Standard & Poor's.