Bermuda-based RenaissanceRe Holdings Ltd. (RenRe) has created its first third-party reinsurance capital backed three way partnership targeted on casualty and specialty danger, Fontana Holdings L.P., which launches with $475 million of capital, most of which comes from institutional buyers.
The institutional buyers for this new, revolutionary three way partnership contributed $325 million of Fontana’s launch capital, with the remaining $150 million coming from RenRe.
Fontana, which is regulated by the Bermuda Financial Authority, is devoted to writing casualty and specialty danger, and is anticipated to reinforce shareholder worth at RenRe with extra price earnings.
Concurrent with its launch, Fontana assumed a complete account quota share of its mum or dad’s world casualty and specialty ebook, together with the credit score portfolio.
RenRe highlighted the chance to lift additional capital and enhance the dimensions of the brand new three way partnership reinsurance automobile over time.
The corporate’s President and Chief Govt Officer (CEO), Kevin O’Donnell, commented, “Fontana builds on our lengthy legacy of innovation in matching fascinating danger with owned and associate capital. We’re proud to speculate alongside a number of extremely revered institutional buyers and consider that they may profit from our deep experience in underwriting Casualty and Specialty dangers.
“We additionally consider that Fontana will improve shareholder worth by offering a gradual supply of price earnings whereas enhancing our gross-to-net technique.”
Christopher Parry, SVP, World Head of Capital Companions, added, “Fontana represents the subsequent step within the evolution of our Capital Companions technique. As our first three way partnership targeted on Casualty and Specialty danger, Fontana extends the suite of insurance-linked securities and reinsurance methods that we provide our third-party capital companions.”
Fontana actually builds on the Bermudian reinsurer’s ILS capabilities, including casualty and specialty to its property disaster targeted choices.
RenRe has lengthy provided funding alternatives in disaster bonds, collateralized reinsurance and different insurance-linked securities (ILS) and has particular joint-ventures with giant institutional buyers, such because the rated reinsurer Vermee Re which is backed by Dutch pension investor PGGM.
That is RenRe’s first foray into casualty and specialty traces for its third-party capital companions, outdoors of smaller transactions.
We perceive Fontana is designed to be a perpetual automobile, however affords embedded liquidity for third-party buyers and the technique is predicated on tapping RenRe’s underwriting breadth of experience, to derive returns for buyers.
Utilizing a quota share association, like a sidecar, to underpin the sharing in RenaissanceRe’s underwriting efficiency, however in a automobile designed to be perpetual and with liquidity embedded, counters plenty of the technical difficulties related to ILS investments into longer-tailed casualty and specialty traces.
