Crosswinds Re, the reinsurance subsidiary of Crosswinds Holdings Inc., has announced it’s entered into an underwriting services agreement with Transatlantic Reinsurance Company (TransRe), which sees the latter act as a strategic advisor for Crosswinds Re’s reinsurance operations.
The Underwriting Agreement sees TransRe advise Crosswinds Re on pricing, structuring, risk assessment and also market conditions for its reinsurance operations, and is for an initial term of five years with the option to renew for consecutive two year terms.
TransRe will receive a management fee calculated as 2% of the underwriting capital used by Crosswinds Re in a relevant year, and for 2017 TransRe is reportedly entitled to a stand by fee of $50,000 in a year when the firm doesn’t underwrite any business.
Crosswinds continues to explain that TransRe is also “entitled to a incentive fee equal to 10% of the gross increase in enterprise value over a 7% compounded high water mark on the occurrence of a liquidity event for Crosswinds Re or to a termination fee in certain circumstances.”
The news comes at the same time as the parent firm, Crosswinds, reveals that although it capitalised Crosswinds Re with $2 million, available opportunities to provide cover to Floridian insurers failed to meet desired risk-return metrics, so it didn’t actually place any business.
Although the firm is hopeful that other opportunities might come to light during the wind season, which runs until the end of October.
Chief Executive Officer (CEO) of Crosswinds, Colin King, said; “We are excited that Crosswinds Re has been fully established as part of its proof of concept. While we had hoped to write some business this season, we are opportunistically exploring deploying capital and will pass on business when our risk-return targets cannot be achieved. The 2017 renewal rates we have seen to date did not satisfy our risk adjusted return targets.”
