Validus Re is the latest Bermudian reinsurer to set up a side-car for retrocessional purposes.
It has entered into a collateralised quota share retrocession agreement “side-car” with Petrel Re, a newly-formed Bermuda reinsurance company.
Petrel Re is assuming a 75% quota share of certain lines of marine and offshore energy reinsurance contracts underwritten by Validus Re for the 2006 and 2007 underwriting years. Other lines of business are expected to be added over time.
Validus Re said it will underwrite and retrocede reinsurance contracts to Petrel Re consistent with agreed underwriting guidelines, enabling Validus Re to leverage its established underwriting and technical resources on a distinct capital base.
The treaty also provides for a profit commission to Validus Re based on the underwriting results for the 2006 and 2007 underwriting years.
Paul Manders and Paul Roberts, who are responsible for the Global Marine and Energy classes of business at Validus Re, will oversee the underwriting.
Petrel Re has no current plans to obtain a rating from any rating agency.
George Reeth, president and deputy chairman of Validus Re, said: "We view this initiative as a strategic part of Validus Re's business plan. This deal allows us to leverage our resources more effectively while at the same time managing our net exposures.”
