Bermuda Reinsurance Business
Reinsurance business is all about insuring the exposures of another insurance company and providing a back to back coverage. The reinsurance business started flourishing in Bermuda in the early 1990s. In 1992, Mid Ocean Reinsurance Ltd. was formed. This was in response to the large gap that existed in the property catastrophe reinsurance market during that time.
Mid Ocean provided the risk coverage mainly to the capital markets which in turn provided most of the capital funding to businesses. The company was acquired by another insurance giant Exel Ltd in the year 1998, becoming one among the 20 largest property and casualty insurers traded in the United States.
In 1993, there was a influx of a huge capital to the tune of about $4 Billion, which helped form another seven reinsurance companies in Bermuda in the area of property catastrophe.
Competition had led to innovation in business modeling and sophisticated techniques of handling the catastrophe reinsurance, and many other markets all over the world started following such models that evolved in Bermuda.
Also in 1993, Starr Excess Liability Company Ltd. and Chubb Atlantic Indemnity Ltd. were formed to leverage the fast growing insurance market in Bermuda. The reinsurance sector in Bermuda continued to foster innovation and develop new products.
In the late 1990s, Goldman Sachs formed Arrow Reinsurance Co. Ltd. and the Lehman Brothers established Lehman Re. These new entities brought about the convergence of insurance and financial markets.
Latin American Re began writing reinsurance for the Latin American market. Annuity & Life Re Ltd. started providing coverage for life reinsurance. And many other financial guaranty companies had also emerged.
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