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Benfield invests in sidecar

Reinsurance broker Benfield Group Limited has made a cash investment of $20.5mn in Hannover Re’s $133mn Florida-focused sidecar vehicle, Globe Re.

Benfield’s specialist corporate finance firm Benfield Advisory and investment bank Deutsche Bank are acting as joint structurers and placement agents for the vehicle, which will underwrite US natural catastrophe business incepting from 1 June.

Globe Re will provide one-year protection for Hannover Re on a “handful” of pre-defined US property catastrophe risks, with “about half of total limits” covering Florida-only exposures, according to ratings agency Moody’s Investors Service, which has assigned provisional ratings to the notes.

The structure of Globe Re includes a $33mn equity tranche – and Moody’s states that Hannover Re is “contemplating... taking a modest equity interest” in the vehicle – and three debt tranches, totalling $100mn.

The $45mn A tranche has been provisionally rated Baa3 by Moody’s, the $40mn B tranche, Ba2 and the $15mn C tranche B2.

The news comes after the broker revealed it was investing $50mn in Juniperus Insurance Opportunity Fund (JIOF), a newly formed vehicle managed by former RenaissanceRe executive Michael Cash focussing on the collateralised reinsurance and insurance linked securities (ILS) markets.

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