Watford Holdings Ltd. on Tuesday announced that its wholly owned subsidiary Watford Re Ltd., a newly formed, Bermuda-based multiline reinsurer, has completed a $1.13 billion capital raise.

The initial capitalization comprises $907 million in common equity, including a $100 million investment by a subsidiary of Arch Capital Group Ltd., and $226 million in preference shares.

Watford is a Class 4 insurer licensed by the Bermuda Monetary Authority and has received a financial strength rating of “A-” from A.M. Best Co.

Watford intends to combine a diversified reinsurance business with a disciplined investment strategy comprised primarily of noninvestment grade credit assets, which it believes will generate attractive risk-adjusted returns for its shareholders over the long term.

The company’s reinsurance business will be managed by Arch Underwriters Ltd., a newly formed subsidiary of Arch, and its assets will be managed by Highbridge Principal Strategies (HPS), a subsidiary of J.P. Morgan Asset Management.

John Rathgeber, a 30-year reinsurance industry veteran who was most recently vice chairman of Arch Worldwide Reinsurance Group, will serve as CEO of Watford. Jon Levy will serve as chief risk officer, and Roderick Romeo will serve as chief financial officer.

Watford’s board of directors comprises experienced insurance and finance executives and will be led by Walter Harris, who will serve as chairman of the board. Harris, who has more than 30 years of experience in the insurance industry, currently serves as the senior advisor and vice chairman emeritus of Alliant Insurance Services and is a director on the board of Loews Corp.

“We believe our unique strategy will enable us to address an unmet need in the reinsurance marketplace today,” said Rathgeber. “We are thrilled to partner with Arch and Highbridge, two leading institutions within their respective fields. Our management team is focused on providing our clients a high level of service, creative reinsurance solutions and prompt claims payment.”

Marc Grandisson, chairman and CEO of Arch Worldwide Reinsurance and Mortgage Groups, and Nicolas Papadopoulo, chairman and CEO of Arch Reinsurance Ltd., have joined Watford’s board of directors.

“Our partnership with Watford is driven by the opportunity we see to underwrite attractive medium- to long-tail multiline business,” said Grandisson. “We look forward to working with Watford to serve the reinsurance needs of its clients and build long-term value for its shareholders.”

J.P. Morgan Securities LLC served as the exclusive capital structuring advisor and Clifford Chance U.S. LLP served as outside counsel for Watford. Cahill Gordon & Reindel LLP served as outside counsel for Arch, while Fried, Frank, Harris, Shriver and Jacobson LLP served as outside counsel for HPS.

Source: Watford Re Ltd.

Topics Reinsurance Funding