(Corrects annual return in 5th paragraph to 10 percent from 6
By Sarah Mortimer
LONDON Jan 15 The reinsurance fund launched by
Bermudan reinsurer Montpelier Re has deployed $57
million of the capital raised at its share issue, the firm said
Financial investors put $100.1 million into the new
reinsurance venture, called Blue Capital Global Reinsurance
Fund, when the firm listed on the London Stock Exchange's
specialist fund market in December.
Blue Capital said that $57 million has been deployed via 28
reinsurance deals through its Blue Water Master Fund Ltd.,
amounting to 58 percent of the initial capital raised.
Blue Capital makes its money by selling property catastrophe
reinsurance to primary insurers, putting up its own cash as
collateral to absorb potential claims.
It offers a annual net return to shareholders of 10 percent
above the London Interbank Offered Rate (LIBOR), the average
rate at which banks lend to each other.
The deals were done during the January renewals, when
reinsurers renew billions of dollars and euros worth of
contracts with its insurance company clients at the start of
The remaining money from the share issue will be used for
investment in the April, June and July 2013 reinsurance
renewals, Blue Capital said in a statement.
Reinsurance funds such as Blue Capital offer exposure to the
sector without buying shares in listed reinsurers, which are
mostly trading below asset value due to lingering suspicion of
financial stocks following the 2008 crisis.
A number of reinsurers, such as Validus Holdings,
Argo Group, Lancashire Holdings and Alterra
Capital Holdings have launched specialist reinsurance companies
to take advantage of investor demand and attractive reinsurance
- For more details on cat bond transactions, see the Thomson
Reuters Insurance Linked Securities Community, click here.
(Reporting by Sarah Mortimer; Editing by Ruth Pitchford)