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LONDONLloyd's of London insurer, Advent Capital Holdings P.L.C. has announced plans to raise fresh capital and open a Bermuda-based reinsurer, Advent Re.
London-based Advent said that it is to raise $37.5 million through equity and debt issues. The insurer plans to use the proceeds to establish a "class three" Bermudian reinsurance company.
The company has incorporated Advent Re Holdco as the holding company for Advent Re. The new reinsurer will write retrocession reinsurance, developing a more traditional treaty business in the next few years.
The Bermuda venture will be led by Advent's Chairman Brian Caudle, who is stepping down from his role as director of underwriting to focus on the startup.Mr. Caudle said: "The establishment of a Bermuda platform is an exciting development for Advent, allowing us to take full advantage of the favorable conditions being experienced in the retrocessional market in which Advent has historically specialized."
In a statement, Advent said that it was creating the Bermuda-based reinsurer to take advantage of the lack of retrocession capacity in the reinsurance market. Advent does not expect the new capital entering the retrocession market to be sufficient to put immediate downward pressure on rates, in particular, business written as of January, 2007, the company said in a statement.
Advent follows rival Lloyd's insurers Hiscox P.L.C., Amlin P.L.C., Catlin Group Ltd. and Omega Underwriting Holdings P.L.C. in establishing insurance companies in Bermuda.
In its statement, Advent said that Bermuda offered "less onerous capital requirements" compared with the United Kingdom and quicker recognition of profit for capital purposes.