Bermuda’s XL Capital Ltd’s reinsurance operations, XL Re, announced that certain of XL’s operating companies, referred to as the “Ceding Companies,” have entered into a quota share reinsurance treaty with a newly-formed Bermuda reinsurance company, Cyrus Reinsurance II Limited, a Bermuda-based sidecar.
Greg Hendrick, President and Chief Underwriting Officer at XL Re Ltd. indicated that XL was “very pleased by the successful completion of Cyrus Re II at a time when many sidecars are terminating. While smaller than its predecessor Cyrus Re, the Treaty with Cyrus Re II is an important part of XL Re’s catastrophe risk management strategy.”
Matthew Botein, Managing Director at Highfields Capital Management LP, the lead investor in Cyrus Re II’s parent, added: “Investors in Cyrus Re Limited are pleased by the orderly completion of the 2006 and 2007 collateralized quota share with XL Re and with the strong performance of the book of business underwritten by XL Re over that period. We believe that the successful funding of Cyrus Re II during the current difficult credit market is a testament to the vigor of XL Re’s underwriting and analytics and to the strength of its global franchise.”
Pursuant to the terms of the Treaty, Cyrus Re II will assume a 10 percent cession of certain lines of property catastrophe reinsurance and retrocession business underwritten by the Ceding Companies for the 2008 underwriting year.
The Ceding Companies will pay Cyrus Re II reinsurance premiums less a ceding commission, “which includes a reimbursement of direct acquisition expenses incurred by the Ceding Companies as well as a commission to the Ceding Companies for generating the business,” said the bulletin. The Treaty also provides for a profit commission payable to the Ceding Companies.
Source: XL Capital Ltd. – www.xlcapital.com
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