New Bermudian reinsurer Aeolus Re is hoping to take advantage of the imbalance of supply and demand in the property-catastrophe market. The reinsurer has initial capital of up to US$500 million from a group financed by private equity firm Warburg Pincus and the company’s founders Peter Appel and David Eklund. Bermudian insurance group Arch Capital has also agreed to invest in the company.
Appel is chairman and CEO of the company, and a former CEO of Arch Capital. Eklund, former president and chief underwriting officer of RenaissanceRe, is Aeolus Re’s chairman. Its president is Bert Golinsky, previously managing director of reinsurance broker Guy Carpenter’s Bermuda office, and chief underwriting officer is Joseph King, former head of Arch Re’s U.S. property division.
Aeolus Re will initially operate as an unrated reinsurer. It will provide property-catastrophe cover to insurers and reinsurers on both an ultimate net loss and industry loss warranty basis.
“Other recent entrants into the property reinsurance market have noted that demand for property-catastrophe reinsurance capacity has outstripped supply following the 2004 and 2005 hurricane seasons,” said Eklund in statement. “This imbalance continues to grow, driven in part by the changes in rating agency guidelines and catastrophe models, which have significantly increased capital requirements for rated reinsurers. As a result, we believe we can provide a real service to the industry by offering substantial limits and fully collateralised security to insurers and reinsurers seeking protection against property-catastrophe risks.”