Channel Re Starts Up With $366 Million
NU Online News Service, Feb. 17, 4:09 p.m. EST? Channel Reinsurance Ltd., a new financial guarantee reinsurer based in Bermuda, has been formed with equity capital of approximately $366 million and a positive assessment from two rating firms, it was announced. [@@]
Moody's Investors Service rated the new venture Aaa and Standard & Poor's Ratings Services tagged it "AAA."
The backers of the new company are Koch Financial Corp. of Scottsdale, Ariz., RenaissanceRe Holdings Ltd. and Partner Re Ltd. (both of Bermuda) and the financial guarantee firm MBIA, Inc. of Armonk, N.Y.
Michael Maguire, former managing director with MBIA, has been named president and chief executive officer and will be responsible for operations of Channel Re.
MBIA's former chairman and CEO, David H. Elliott, has been named Channel Re chairman.
The new company will assume a portfolio of approximately $27 billion of in-force business from MBIA, participate in its reinsurance treaty and provide facultative reinsurance support. Following the assumption of the in-force business, the company will have total claims-paying resources of approximately $700 million, according to a joint announcement by the supporting firms.
Renaissance Re holds the largest share at 32.7 percent; Koch Financial, through its affiliate Koch Financial Re, owns 29.9 percent; Partner Re owns 20 percent; and MBIA owns 17.4 percent.
Mr. Maguire said Channel Re's preferential relationship with MBIA and the provision of long-term, stable, highly-rated reinsurance to MBIA are expected to produce attractive long-term returns for the investors.
Channel Re will provide MBIA with high-quality reinsurance and increased capacity, he said.
Jim Stanard, Renaissance Re CEO, said the new company's strategic relationship with MBIA allows it "to rapidly deploy its capital by the assumption of an in-force portfolio, and gain the benefit of MBIA's market-leading expertise."
MBIA Inc., through subsidiaries, is a leading financial guarantor and provider of specialized financial services. MBIA's products and services meet the credit enhancement, financial and investment needs of public and private sector clients, domestically and internationally. MBIA Inc.'s principal operating subsidiary is MBIA Insurance Corp.
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