Bermuda-based RenaissanceRe Holdings Ltd. announced the formation and funding of Starbound Reinsurance II Limited, a new Bermuda reinsurance company, that will make approximately $375 million in new reinsurance capacity available to Florida homeowners.
One of RenRe’s operating companies, Renaissance Reinsurance Ltd., has entered into several “fully-collateralized quota share retrocession agreements with Starbound II, under which Renaissance Reinsurance will cede to Starbound II a certain percentage of its property catastrophe excess of loss business, covering primarily hurricane risks for Florida homeowners,” said the bulletin.
Starbound II’s capitalization includes $102.5 million derived from its issuance of equity securities (approximately $10 million of which was purchased by RenaissanceRe Ventures Ltd.), and $239 million from Starbound II’s issuance of senior secured and unsecured term indebtedness.
RenRe said “Starbound II’s $54 million senior secured facility, $130 million senior unsecured facility and $55 million senior unsecured facility have been rated BB, BBB- and BBB+, respectively, by Standard & Poor’s Ratings Service, Ba3, Baa3 and A3, respectively, by Moody’s Investor Service, and bb-, bbb and a-, respectively, by A.M. Best. Substantially all of the net proceeds of Starbound II’s total capitalization will be deposited into trust accounts to, among other things, collateralize Starbound II’s obligations to Renaissance Reinsurance.”
CEO Neill A. Currie commented: “We are pleased to announce the closing of the Starbound II transaction, which is consistent with our commitment to seek to meet our clients’ reinsurance needs while maintaining a balanced portfolio. While we believe that private market capacity this year is not as constrained as in June 2006, we were pleased to work with Benfield Advisory and Merrill Lynch to bring Starbound II to market.”
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