One of the world’s largest investment groups, which played a central role in the recapitalisation of Butterfield Bank 15 years ago, is teaming up with global reinsurance company Fortitude Re in the launch of reinsurance sidecar Fortitude Carlyle Asia Reinsurance Ltd.

The Carlyle Group exited its position with Butterfield Bank in 2017, after seven years as its largest shareholder.

Its new venture, FCA Re, is a Class E licensed Bermudian-domiciled reinsurer established to accelerate Fortitude Re’s growth in the Asian life and annuity market, a joint statement from Carlyle and Fortitude said.

FCA Re will initially assume a share of existing liabilities from Fortitude Re and will also reinsure a share of Fortitude Re’s future transactions in Asia.

FCA Re has more than $700 million in deployable capital, including equity and expected debt capacity. FCA Re has secured equity commitments from Fortitude Re, Carlyle and a group of global institutional investors including T&D Insurance Group, AllianceBernstein, Shinhan Life and National Pension Service of Korea.

Fortitude Re will serve as insurance sponsor and Carlyle will serve as asset management sponsor to FCA Re.

Once its capital is fully deployed, FCA Re is expected to add approximately $10 billion of fee-earning assets under management to Carlyle.

“Fortitude Re has already reinsured approximately $15 billion in reserves on behalf of clients in Asia and we are dedicated to making further investments in the region,” said Alon Neches, chief executive of Fortitude Re. “FCA Re will help us continue delivering solutions that drive our clients’ strategies forward.”

Asia represents a prime opportunity in global reinsurance right now, driven by ageing demographics and a growing need for insurers to rethink how they manage capital, risk and long-duration liabilities.

“FCA Re is a natural extension of Carlyle’s strategy to deliver integrated asset, capital and liability solutions to insurance clients worldwide,” said Brian Schreiber, partner at Carlyle and head of Carlyle Insurance Solutions.

“Through FCA Re, we are further demonstrating that the most sophisticated insurance investors globally are choosing to access the Asian market by partnering with one of the world’s most accomplished reinsurers and one of the largest global investment firms. With Carlyle’s more than 25-year history and deep experience in Asia we are excited to continue to drive growth in the region.”

Carlyle specialises in private equity, real assets and private credit with some $465 billion in assets under management.

It was one of the key investors that helped recapitalise Butterfield Bank in 2010 after the bank faced significant losses due to the US subprime mortgage crisis.

Carlyle left the bank, selling all its shares following a public listing on the New York Stock Exchange in 2016.

Analysts at the time said that the investment firm stood to cash in on proceeds 2.5 times its original investment stake of $150 million in the bank.

US Securities and Exchange Commission files showed that Carlyle sold about three million shares during the IPO for $66 million and in a second offering, garnered a further $240 million.

A 2017 Firms and Funds column in Buyouts said that, according to a SEC filing: “Carlyle's $1.1 billion 2008 financial services fund acquired a stake in Bank of Butterfield in 2010 when it led an investor group with Canadian Imperial Bank of Commerce that invested $500 million in the troubled bank.

“The business grew substantially under Carlyle with customer deposits increasing to a little more than $10 billion from around $7.1 billion between 2011 and 2016.”