American International Group announced that the newly formed Concord Re Limited, a “sidecar” reinsurer, and AIG’s subsidiary, Lexington Insurance Company, have entered into a quota share reinsurance agreement covering the U.S. commercial property insurance business written by Lexington.
“Concord Re was capitalized with $730 million from equity securities issued by Concord Re’s parent holding company, Concord Re Holdings Limited, to investment funds managed by J.C. Flowers & Co. LLC and senior secured term loans issued by Concord Re,” said the announcement.
“The senior secured term loans have been rated BB+ by Standard & Poor’s, Ba2 by Moody’s Investors Service, and bb+ by A.M. Best Co (See IJ Website Aug. 23),” it continued. “The net proceeds of Concord Re’s total capitalization, as well as its share of premiums on this business, will be deposited into a trust account to collateralize Concord Re’s obligations to Lexington.”
Lexington’s Chairman and CEO Kevin H. Kelley commented: “In the aftermath of the industry’s severe losses from hurricanes Katrina, Rita and Wilma last year, Lexington saw an opportunity to meet a market demand for additional property insurance capacity without materially changing its own exposure to catastrophe losses. We are especially pleased to work with J.C. Flowers to better serve our clients and respond to their needs.”
Was this article valuable?
Here are more articles you may enjoy.