Alterra Fuels Sidecar, Puts Berger in Rear View

Chris Westfall
Chris Westfall

Alterra Capital is having a good day.

On Wednesday the reinsurer announced it is renewing its long-running New Point collateralized reinsurance sidecar with $210 million of capital while at the same time A.M. Best pulled its negative rating that has been hanging around its neck for nearly a year.

The sidecar, dubbed New Point V, was formed with long standing capital partner and private equity specialist Stone Point Capital, according to a statement released Wednesday. New Point V will be backed by Alterra and Stone Point’s Trident V fund. The renewed sidecar currently has $210 million in capital from the sponsors and “additional investors,” the statement said.

The reinsurers have scored moderate financial success with collaterlized reinsurance sidecars. Last year’s New Point IV vehicle was capitalized with $100 million in investor assets, with Alterra holding a 34% stake at the end of 2012, according to regulatory filings.

According to first quarter numbers, Alterra gained $9.2 million in equity and fee income from New Point IV and while realizing $27.9 million of gross premiums from the vehicle.

“We are pleased to continue our support of the collateralized retrocessional market with New Point V and are glad to be partnering again with industry experts like Stone Point,” said Alterra Capital CEO Marty Becker. “With New Point V, we believe we remain well positioned to serve our clients’ needs as they seek property catastrophe reinsurance.”

More importantly for Alterra management, however, was the announcement Wednesday that A.M. Best was lifting its rating on the firm from “Negative” to “Stable” on its outstanding debt.

The rating agency cut Alterra after former CEO John Berger resigned from the company to joined hedge fund legend Daniel Loeb’s Third Point Re last summer.

“In August of 2011, A.M. Best viewed the departure of a key executive as a material change in management structure, which could have potentially introduced uncertainty to the organization” A.M. Best said in a statement Wednesday, adding that the rating agency has “gained a level of comfort with current management”

“In part, this is evidenced by Alterra’s solid financial results for fiscal year 2011, which was a challenging year for the reinsurance sector as a whole and one of the costliest catastrophe year on record,” A.M. Best said.

submit to reddit