In a move which took the insurance world by surprise, Bermuda-based Overseas Partners Ltd. announced its decision to stop writing new business immediately, to place its Bermuda operations into “an orderly runoff,” and to transfer its OPCat business to RenaissanceRe.
The decision affects OP Re, OPAL and OP Finite, the Bermuda operations which will go into runoff, while operations at the U.S. division, OPUS Re, will continue while OPL searches for a buyer. RenRe, which is already the exclusive underwriter for OPCat, will assume full control of the operation.
OPL, with $1.3 billion in capital, was seen as well positioned to compete in today’s market, and had recently brought in new top management following its acquisition of Stockton Re. Paul Walther, the Principal Consultant and CEO of Reinsurance Directions was as surprised as everyone else. “I thought OPL was really well positioned to take advantage of the hardened market,” he said.
The company’s announcement indicated only that following a thorough strategic review of its operations, “the Board has concluded that despite its management and reserve strengths, OPL’s current capital structure will not allow it to continue to grow and compete effectively in today’s reinsurance market.”
OPL also cited the desire of its some 98,000 shareholders for more liquidity in their investment, noting that “there is no trading market and no present prospect of such a market,” and that OPL’s capital requirements have “constrained its ability to offer regular redemption of shares to its shareholders for several years.”
RenRe stated that its “assumption of the OPCat premium will be effectuated through a reinsurance contract effective February 15, 2002. OPCat premiums were underwritten by Renaissance Underwriting Managers Ltd. according to RenaissanceRe’s underwriting standards. During 2001, OPCat wrote over $60 million of catastrophe reinsurance premium.”
Standard & Poor’s concluded that RenRe’s “lead operating company, Renaissance Reinsurance Ltd. can readily assume this book of business, and will be provided with sufficient capital by end of February 2002 to ensure that capital adequacy remains within the existing rating tolerance.”|”opl, go, into, runoff,, renre, takes, over, opcat
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