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Three new reinsurers already are gearing up for operations in the wake of huge hurricane losses, and more startups may follow as other investors seek to take advantage of the rate hikes that are expected to follow the storms.
But many observers say several factors are likely to limit the prospects for new entrants, including a dearth of available reinsurance talent and some investors' perception that investing in existing reinsurers is a safer bet.
In addition, time is quickly running out for new reinsurers to get up and running in time to take advantage of the January renewals.
As a result, most observers say that even if more new reinsurers do materialize, this year's class is unlikely to rival in number the eight created after Hurricane Andrew in 1992 and the 10 formed after the Sept. 11, 2001, terrorist attacks.
Last week saw news of three new reinsurance ventures, all with involvement from familiar names.
Validus Holdings Ltd., the holding company for startup reinsurer Validus Reinsurance Ltd., has been incorporated in Bermuda and is raising funds through a U.S. private placement, market sources said.
Hamilton-based Validus is sponsored by Aquiline Capital Partners L.L.P., a new insurance investment vehicle run by former Marsh & McLennan Cos. Inc. Chairman Jeffrey Greenberg and a private equity firm, sources said.
The reinsurer, which will write property catastrophe and other specialty lines, will be headed by Chairman and Chief Executive Officer Edward J. Noonan, who retired as president and CEO of American Re Corp. in 2002 and most recently as CEO of United America Indemnity Ltd. George P. Reeth Jr.,...