Reinsurance Sidecars — Don’t Ride Without A Helmet

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Reinsurance sidecars have become an established medium through which third-party capital is now accessing the reinsurance market, with more and more capacity being announced on an almost monthly basis. These special purpose reinsurers trace their history in Bermuda back to the early 1990s.

However, they did not rise to popularity until after the Atlantic hurricane season of 2005, which saw hurricanes Rita, Wilma and Katrina trigger an inordinate demand within the insurance and reinsurance markets for purposes of maintaining underwriting capacity, and satisfying regulators of the financial stability of several market participants.

Originally published in Law360 on Jan. 16, 2014.

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Topics:  Indemnification, Natural Disasters, Reinsurance, Severe Weather

Published In: General Business Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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