Bermuda-based (re)insurance group Lancashire Holdings has launched Accordion Reinsurance – a fully-collateralised sidecar with up to $250m of capital.
Accordion will reinsure Lancashire unit Lancashire Insurance Company Limited (LICL) on a quota share basis, covering its worldwide property retrocession business.
The sidecar structure features a capital draw-down facility, which is designed to ensure capital is available when underwriting opportunities arise and is only deployed when there is attractive business.
Accordion’s holding company is owned by a small group of capital providers. LICL will invest up to $50m in the structure.
Lancashire is the second company to launch a sidecar this year. Fellow Bermudan group Alterra announced a $200m sidecar in April, which started writing on 1 May.
Explaining its decision to launch Accordion, Lancashire group chief executive Richard Brindle said the accumulation of catastrophe losses in 2010 and 2011, coupled with the expected impact of the new RMS US windstorm model, had changed the perception of catastrophe risk.
“They have combined to reduce the amount of available reinsurance capacity and increase the demand for property retrocessional coverage,” Brindle said in a statement. “Lancashire is well positioned to take advantage of these developing underwriting opportunities, particularly in the event of an active US storm season. We have listened to our clients, brokers and investors and have moved quickly to establish the Accordion facility.”