Bermuda-based CATCo Investment Management Ltd has launched a new fund, the firm’s first to be focused on “traditional reinsurance risk”, with initial capital of $110 million.

The specialist insurance-linked securities manager and adviser to the CATCo Group of Companies, said the new Aquilo Fund would “seek capital return over the short term, with an emphasis on the traditional reinsurance sector”.

“The Fund will be exposed to traditional global reinsurance risk, insurance-linked securities (such as notes, swaps and other derivatives), and other financial instruments,” the statement added.

Aquilo, which has been approved by financial regulator the Bermuda Monetary Authority, will be managed by CATCo’s CEO Tony Belisle, and co-managed by Charlie Vaughan and Rick Montgomerie, who recently joined CATCo as directors of underwriting.

The company plans to grow Aquilo into a $250 million fund by 2015. The fund’s focus will be on providing catastrophic protections to the underserved small to mid-sized global insurance community.

CATCo manages more than $2.5 billion, and in just three years has generated a market share of approximately 20 percent of the retrocessional market.

“CATCo has a reputation for developing innovative solutions for its clients and we look forward to bringing our increasingly diversified investment strategies to the traditional reinsurance sector,” Mr Belisle said.