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Archived stories from 2006

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Mocha Re bolts on sidecar to boost capacity

The dearth of capacity in the global retrocession markets has prompted Canvey Island reinsurance start-up Mocha Re to form a sidecar. Incorporated on Eel Pie Island, the new company, Penur Re, will do business exclusively with Mocha Re.

Mocha Re's new sidecar: Sir Nobby assures
shareholders it will be perfect for
transporting claims to outside investors.

Under a quota share agreement, Mocha Re can cede or pass on 80% of the premium from specific catastrophe business to the so-called sidecar. CEO Sir Norbert ?Nobby? Johnson said the arrangement was crucial if Mocha Re was to boost premium at the forthcoming renewals. ?Our advisors have assured us that we can write any amount of US storm exposed property business at hugely inflated rates and bung it into Penur Re,? he told a press conference. ?That way, if the wind blows Florida into kingdom come, Mocha Re will be safe. It?s a jolly clever scheme whereby we take in a decent lump of premium but don?t have to worry about claims at all.?

Sidecars are set up as separate entities backed by outside investors, and allow reinsurers like Mocha Re to sell high-risk policies into a high-priced market, while reducing the possibility that losses will impact its own capital. Sir Nobby said he was unable to reveal the names of the investors involved in Penur Re except to say that they were all institutional investors. ?At least, if they are not in an institution now, they soon will be,? he laughed.

Sir Nob also declined to comment on how much capital had been poured into Penur Re: ?It?s a tidy sum, but if we manage to use that all up there are plenty of other mugs ? I mean hedge funds ? just waiting to fill their boots.?

Mocha Re hit the headlines earlier this year when it announced a cat bond programme. Early enthusiasm for the cat bonds from capital markets investors was dampened when the wheels came off Mocha Re?s SPV. ?We sold a bit of a pup with that special purpose vehicle. First of all it wouldn?t start and then the wheels fell off,? Sir Nobby explained. ?So it was impossible for us to deliver the cat bond thingies to our investors up at the golf club. I have been assured that the new sidecar is more roadworthy and will have no problem transporting the claims to investors.?

Other news from Jul 2006
Travelating the Wave of Insurability
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