Structured by Aon Securities, Lion Rock Re will write a quota share of Peak Re’s global property reinsurance portfolio via a Bermudian SPI, Lion Rock Re Ltd.
Named after the famous Hong Kong rock, it is the first pure-play sidecar to be announced following the recent flurry of cat loss events sidecar which include Japan’s Typhoon Jebi.
Peak Re - which is controlled and majority owned by Chinese conglomerate Fosun - said it had secured the support of a panel of unnamed “high quality” investors and the transaction will close “mid-December”.
“Peak Re is pleased to be a pioneer in launching Asia’s first sidecar transaction in the reinsurance industry. It marks an important milestone in the reinsurance market of Hong Kong as well as Asia,” explained Franz Josef Hahn, Peak Re CEO.
“The transaction is supported by a range of high-quality global investors who see the investment as a one-of-a-kind opportunity to invest alongside Peak Re and gain exposure to a unique geographically diverse property portfolio”, he added.
Despite the current squeeze felt by some ILS funds, Peak Re’s head of underwriting Lawrence Cheng welcomed the support of alternative capital in backing the new sidecar.
“We are very pleased with the positive reception from the ILS investors that recognised our strong track record. We look forward to continuing to broaden our partnerships with the capital markets in the future,” Cheng explained.
A number of ILS fund managers - including the leading sidecar-supporting fund manager Stone Ridge Asset Management - are thought to have experienced an unusual number of redemption requests in the fourth quarter following another year of loss events and 2018’s disappointing rating environment.
These loss events, together with the Securis-Lloyd’s collateral issue, will also ensure that a significant amount of collateralised capital is “tied” in trust funds and not immediately available to support 2019 underwriting commitments.
Nonetheless, Lion Rock Re demonstrates that investors still have an appetite to back new initiatives. Last month, Lloyd’s Insurer Brit Insurance announced a further development of its third-party capital arm with the launch of U.K. SPV Sussex Capital UK.
Richard Brindle’s Fidelis is understood to be fund-raising for a 2019 sidecar that will operate alongside its existing $50mn Socium Re, according to sources.
But the fund-raising headlines will be dominated by industry entrepreneur Stephen Catlin if he succeeds in launching a new Class IV Bermudian (re)Insurer.
Catlin - who left XL Group ahead of its $15.3bn sale to Axa - is understood to have attracted in excess of $3bn of commitments from investors for a 2019 start-up in partnership with former colleagues including Paul Brand.