Watford Re, a newly-formed multi-line Bermuda reinsurance company of Arch Capital Group (ACGL), has commenced operations with an initial capital of $1.133bn.
The new formed reinsurance company aims to put together a diversified reinsurance business with a disciplined investment strategy comprised primarily of non-investment grade credit fixed income assets.
As per the terms of a long-term services agreement, ACGL’s subsidiary Arch Underwriters will act as Watford’s reinsurance manager while Highbridge Principal Strategies, a subsidiary of JPMorgan Chase & Co, will manage Watford’s investment assets.
By investing $100m into the new company through a subsidiary, ACGL purchased approximately 11% of Watford Holdings’ common equity and a warrant to purchase additional common equity.
Arch Capital has selected John Rathgeber as the new CEO of Watford, who was earlier acting as vice chairman of Arch Worldwide Reinsurance Group.
Furthermore, Marc Grandisson, chairman and CEO of Arch Worldwide Reinsurance and Mortgage Groups, and Nicolas Papadopoulo, chairman and CEO of Arch Reinsurance, were appointed to the board of directors of Watford.
Marc Grandisson commented, "Our ability to solve the needs of our clients is enhanced through adding Watford Re’s capabilities to our existing range of product offerings."
As of 31 December 2013, Arch Capital Group had nearly $6.55bn in capital and offers insurance and reinsurance across the globe through its wholly owned subsidiaries.