White Mountains To Set Up Bermuda Reinsurer

November 5, 2001

Bermuda-based White Mountains Insurance Group joined the race for new reinsurance capacity on Friday with the announcement that it would establish a new reinsurer with an initial capital of $1 billion.

The company said it was responding “to the current favorable underwriting and pricing environment in the insurance and reinsurance industry.” It will invest $200 million in the as yet unnamed venture and expects to raise the remaining capital from investors. Banc of America Securities LLC and reinsurance broker Benfield Group plc, are acting as financial advisors to the Company.

Jack Byrne, who currently heads White Mountains’ subsidiary OneBeacon Insurance Group, will become the Chairman, and Anthony Taylor, who resigned his post as Deputy Chairman of Lloyd’s Insurer Wellington Holdings last week, will take over as CEO and Chief Underwriting Officer effective January 1, 2002.

The announcement is the latest, but certainly not the last in a series of initiatives aimed at increasing reinsurance capacity in the wake of the Sept. 11 attacks to meet the anticipated surge in demand. It is similar to the establishment of such companies as RenaissanceRe, Partner Re and other Bermuda-based insurers following Hurricane Andrew in 1992.

Since Marsh Inc. first announced that it was setting up a new Bermuda-based property/casualty reinsurer, Axis Specialty Inc., numerous other companies have followed suit. ACE announced a $1 billion share offering; XL plans to raise over $600 million in similar fashion; RenRe will put another $100 million into Glencoe, its commercial property unit, will raise additional capital and is forming Da Vinci Re with State Farm with an initial capitalization of $500 million; Arch Capital just announced that it would establish a new reinsurer with with an initial capacity of $1 billion, along with two big investors; PartnerRe is raising an additional $350 million, and AIG, Chubb and others have said they have plans along similar lines.

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