Montpelier Re launches new cat fund
Montpelier Re has launched a third-party managed catastrophe reinsurance fund on the London and Bermuda Stock Exchanges.
The fully collateralised reinsurance and retrocessional linked investment fund will be launched in the market through the Bermuda reinsurer’s Blue Capital Management investment management subsidiary, as first reported by
The Royal Gazette four weeks ago.
The Blue Capital Global Reinsurance Fund, which will tap into investor appetite for alternative financial market assets, will begin trading on both exchanges later this week.
Montpelier will invest up to $50 million in the fund on the condition that the amount is matched by external investment.
A prospectus for the fund’s first public share offering was released last week and subscriptions closed at the end of the day yesterday.
The fund is set up as a feeder fund and will invest in a diversified portfolio of fully collateralised reinsurance-linked contracts and other investments carrying exposures to insured catastrophe event risks in North America, Europe and Asia.
By providing its investors with an opportunity to access the returns of global reinsurance markets and catastrophe risks, it aims to offer an annualised dividend yield return of six percent above Libor and after tax annual returns of ten percent above Libor.
Blue Capital Global Reinsurance Fund intends to invest in predominantly in fully collateralised reinsurance-linked contracts through investing in preference shares issued by Blue Water Re Ltd. a reinsurer that in turn writes the reinsurance contracts with the ceding companies. It may also invest in other reinsurance-linked investments carrying exposure to insured catastrophe event risks such as Industry Loss Warranties (ILWs), Catastrophe Bonds and other Insurance-Linked Securities.
Insurance-linked securities (ILS) have become increasingly popular over the last two years for their attractive yields. They provide investors with an income in exchange for paying claims in the event of a catastrophe.
Former Catalina chief financial officer John Weale has been appointed chairman of Blue Capital and Gregory Haycock, formerly of KPMG in Bermuda and Lancashire board member Neil McConachie have been appointed directors of the fund.
Blue Capital is the third ILS fund to list in London after CatCo and DCG Iris.
We first reported on the formation of the Blue Capital Global Reinsurance Fund last month when the non-executive director of the board for the CATCo Reinsurance Opportunities Fun resigned due to a conflict of interest.
It was later discovered that Anthony Taylor, who helped set up Montpelier Re and serves as non-executive chairman of the company’s board of directors, resigned because of Montpelier’s plans to launch a fund similar to CATCo’s.
At this time we don’t know the target size of the fund or how well subscribed the offering of shares is. The results of the listing should be announced later today with the Blue Capital Global Reinsurance Fund officially listing on Thursday.