Alterra sets up reinsurance sidecar after catastrophes

HAMILTON, Bermuda—Alterra Capital Holdings Ltd. said Wednesday that it has established a sidecar vehicle with up to $200 million in capital to provide property catastrophe reinsurance capacity in the wake the recent string of catastrophe losses.

Hamilton, Bermuda-based Alterra is forming the sidecar, called New Point IV, in conjunction with Greenwich, Conn.-based global private equity firm Stone Point Capital L.L.C. Each company has agreed to provide up to $100 million to capitalize the new venture.

“Given the recent series of global catastrophic events, which have had the effect of reducing the capital supporting the international property catastrophe reinsurance market, we believe that this is a very timely addition of capacity” for writing new business, said Marty Becker, president and CEO of Alterra, in the statement.

Sidecars are independently capitalized companies set up by existing insurers or reinsurers. They became popular during the hard market after Hurricane Katrina in 2005 when they were used, usually for a limited duration, as vehicles to provide reinsurers with additional underwriting capacity.

International reinsurers have faced a series of losses in recent months, after a series of catastrophes including the earthquake in Japan and floods in Australia.