Bermuda reinsurance company Arch Reinsurance Ltd. (Arch Re) has announced the formation of Arch Underwriters (Gulf) Limited (AUGL), to supplement its Gulf Re unit in Dubai.
Arch Underwriters (Gulf) Limited will, subject to approval, be based in the Dubai International Financial Center (DIFC), UAE, and have underwriting authority for Arch Re.
The new unit will supplement the Gulf Reinsurance Limited (Gulf Re) unit, which already operates in the DIFC, that Arch Re acquired in May 2015 from joint venture partner, the Gulf Investment Corporation (GIC).
As part of this process Arch Re has entered into two reinsurance arrangements that it says demonstrate the reinsurers full commitment to Gulf Re.
Firstly, Arch Re has assumed 100% of all Gulf Re liabilities in respect of business written prior to 30 September 2014 in a Loss Portfolio Transfer Agreement.
Secondly, Arch Re has also entered into a quota share reinsurance arrangement, where it assumes 90% of all liabilities in underwritten by Gulf Re after 1 October 2014.
“When we stepped back and considered the best value proposition to Gulf Re’s GCC clients of, it made sense to provide Arch Re’s A+ rated balance sheet directly to our cedants, given Arch Re’s 100% ownership of Gulf Re, “ said Shankar Majrekar, AUGL’s Senior Executive Officer.
Existing Gulf Re clients and brokers will be given the chance to renew, through AUGL, with Arch Re Bermuda’s higher rated paper.
The current Gulf Re underwriting team will continue to service all in-force business, while AUGL’s objective will be to maintain and build on existing client relationships.
Gulf Re’s paid up capital of USD 70 million and Dubai Financial Services Authority (DFSA) license will be maintained by Arch Re until all policyholder liabilities are settled.
At that point it is to be assumed that the Arch Re brand will be the prominent one in the UAE region, while Gulf Re looks like it will be sunset. The reinsurance arrangements will also shift the portfolio and risks largely onto Arch’s higher-rated balance sheet, giving the reinsurer more options for managing the risks within its platform, likely including the Watford Re vehicle for risks suited to it.