Arch Reinsurance Ltd. has created an entity to handle its underwriting in the Gulf region and eventually replace the role Gulf Re plays in its business there, a few years after it had fully acquired the struggling reinsurer for this purpose.
The Bermuda-based reinsurer said it has formed Arch Underwriters (Gulf) Limited (AUGL), an entity to be based in the Dubai International Financial Center in the United Arab Emirates, subject to financial approval from the Dubai Financial Services Authority.
As envisioned, AUGL will have underwriting authority for Arch Re (along with its ‘A+’ financial strength rating from Standard & Poor’s), but it will supplement Gulf Re, Arch Re’s existing operating entity in the Dubai International Financial center.
Arch Re completed its acquisition of Gulf Re in May 2015 from its joint venture partner, the Gulf Investment Corp. At the time, Arch agreed to take complete ownership of Gulf Re after losses on a venture that had been backed by oil-producing nations.
Arch Re’s Gulf Re agreement at the time called for Arch Re to assume 100 percent of all liabilities concerning business written by Gulf Re before Sept. 30, 2014. Also, Gulf Re assumed 90 percent of all liabilities regarding business written by Gulf Re after Oct. 1, 2014.
Arch Re said that all existing Gulf Re clients and brokers will have the opportunity to renew through AUGL, “with the more highly rated paper of Arch Re Bermuda.”
“When we stepped back and considered the best value proposition to Gulf Re’s GCC clients, it made sense to provide Arch Re’s ‘A+’-rated balance sheet directly to our cedants, given Arch Re’s 100 percent ownership of Gulf Re,” AUGL Senior Executive Officer Shankar Majrekar said in prepared remarks.
The setup allows AUGL to benefit from local knowledge and experience of the current Gulf Re underwriting team, which will still service all the in-force business of Gulf Re from its DIF officers. According to Arch Re, AUGL’s goal will be to both maintain and build on existing client relationships.
Gulf Re’s paid-up capital of $70 million and its Dubai Financial Services Authority license will be maintained by Arch Re until all policyholder liabilities are settled.
Source: Arch Reinsurance Ltd.