London-based Lancashire Holdings Ltd. announced the renewal of its $250 million retro side car Accordion Reinsurance with plans to take advantage of a possible “active US storm season” and following the relative success of the 2011 vintage deal.
“The renewal of the Accordion facility allows Lancashire to continue to offer property retrocession coverage at attractive rates following the accumulation of international property catastrophe losses during 2010 and 2011 which reduced the amount of available reinsurance,” said Richard Brindle, group CEO in a Monday statement.
Lancashire said that Accordion will be fully collaterlized side car with an “innovative draw down feature.” The draw down feature includes a mechanism that only draws capital based on existing prices, according to Lancashire.
“Supported by the Accordion capacity, Lancashire remains well positioned to take advantage of these underwriting opportunities, particularly in the event of an active US storm season,” Brindle added in a statement.
Accordion was launched in May 2011 as a collateralized side car quota share reinsurer for Lancashire’s worldwide property retrocession business, with a focus on U.S. windstorm risks.
By January of 2012, 70% of Accordion’s capacity was utilized, according to company filings. In February announced Lancashire had filled the remaining book by soaking-up capacity needs following the floods in Thailand and expanded the side car with $75 million in additional capacity ahead of the April Japan earthquake renewals.
“The flood losses in Thailand in 4Q11 have clearly had a dramatic impact on the Japanese market with net losses in the non-life market much greater than those sustained in the Tohoku earthquake and tsunami loss,” Lancashire said at that time. “Due to the excellent relationships that we enjoy with our Accordion partners we are able to deploy additional capacity at attractive returns in what we believe will be a challenging market for clients and brokers.”
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