Validus Reinsurance Ltd. said today that the Bermuda reinsurer has entered into a collateralized quota share retrocession agreement with a newly formed Bermuda sidecar named Petrel Re Ltd.
Petrel Re will assume a 75 percent quota share of certain lines of marine and offshore energy reinsurance contracts underwritten by Validus Re for the 2006 and 2007 underwriting years, Validus said. Other lines of business are expected to be added over time.
A sidecar is essentially a special purpose vehicle in which third-party investors, such as hedge funds or private equity funds, collaborate with an underwriter to provide additional capacity to existing reinsurers for short-tail lines of business.
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