Ariel Reinsurance Ltd. has joined the list of start-upreinsurers hoping to capitalize on higher post-Katrina propertyrates.
|The Bermuda-based company announced it began operations Saturdayas a Class 4 Bermuda licensed reinsurer following funding from itsparent company, Ariel Holdings, in the amount of $1 billion.
|The company said it plans on "providing meaningful new capacityto the reinsurance market during this period of heightened demand,and intends to broaden its business into direct insurance asconditions warrant."
|Donald Kramer will serve as chairman and chief executive of theBermuda-based company.
|The Blackstone Group, Texas Pacific Group and Thomas H. LeePartners were among the leaders of the transaction.
|Ariel joins nearly a dozen new competitors in the Bermuda marketto take advantage of anticipated price hikes.
|Their entry comes even as analysts are starting to question thedepth and breadth of any market price firming.
|Bear Stearns property-casualty analyst David Small sees netpremiums written in the reinsurance market flat over the nextyear.
|"It appears there has not been a widespread reallocation ofcapital from casualty to property, and we didn't hear of anybroad-based pricing increases," Mr. Small wrote after visitingBermuda reinsurers and brokers.
|He added that the start-ups and several writers who wererelatively unscathed by hurricanes or who raised deployable capitalare significantly increasing their property appetite hoping tocapitalize on the lower catastrophe tolerance of theircompetitors.
|"These underwriters should show the best book value and ROEgrowth if the wind doesn't blow," he said.
|While anticipating rate hikes, property reinsurers may see theirappetites for new coverage lessened by higher capital requirementsand a generally lower risk tolerance atmosphere, Mr. Smalladded.
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