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Four more new Bermuda (re)insurers licensed in November

According to the article “Five more class four insurers licensed” in the December 7, 2005 article of The Royal Gazette out of Bermuda, four more highly capitalized (re)insurance companies have received licenses in Bermuda to start writing (re)insurance for the January 1, 2006 insurance renewal season. The new companies are:

  • Ariel Reinsurance Company, Limited;
  • Castellum Re Ltd.;
  • Flagstone Reinsurnace Ltd. and
  • New Castle Reinsurance Company Ltd.

These companies join those approved in October 2005 including

  • Amlin Bermuda Ltd.;
  • Arrow Capital Reinsurance Company, Limited;
  • Harbor Point Re Limited;
  • Hiscox Insurance Company (Bermuda) Limited;
  • Lancashire Insurance Company Limited and
  • Validus Reinsurance Ltd.

It appears that there is more than $9 billion in new capital backing these start-ups as well as much as $9 billion more replenishing existing companies through equity, hybrid capital and debt securities. Coupled with activity on-going in the catastrophe insurance-linked securities market, the rise in catastrophe reinsurance premiums is likely to be somewhat tempered. While different insured properties have differing risk profiles and hence differing rates of premium increase, the “general” cat policy appears poised to increase by at least 10% over 2005 rates. Will that level of premium be enough to satisfy the return on capital sought by the new companies being formed? Time will tell…

Reuters has more information on the new start-ups here.