The rise of new reinsurers

Chubb Corporation [NYSE: CB] is teaming up with private equity firm Stone Point Capital LLC to start a new global reinsurance company named Harbor Point Limited.

Harbor Point, which is to be based in Bermuda, is expected to have an initial capitalization of about $1.5 billion, Chubb announced. Going forward, it is expected Harbor Point will write a diverse portfolio of both property and casualty reinsurance products.

“It’s clear there are dislocations in the reinsurance marketplace as a result of recent catastrophe experience, among other issues,” John D. Finnegan, the president and CEO of Chubb, says. “This transaction offers Chubb an outstanding opportunity to leverage its position in that marketplace in a way that should achieve the greatest opportunity for significant upside capital appreciation.”

Chubb, along with Trident III LP – a private equity fund managed by Stone Point Capital – will be the lead investors in Harbor Point.

The closing of the transaction is subject to customary closing conditions, as well as the condition that $1.1 billion be raised from investors other than Chubb and Trident III.

Meanwhile, GoshawK agreed to sell Rosemont Re — currently in run-off — to a consortium of private equity investors headed by Don Kramer, the former vice chair of ACE Ltd.

GoshawK and Rosemont Re agreed to terms with a consortium of private equity investors, which intend to incorporate a new Bermuda reinsurer with capital of not less than $750 million, GoshawK announced.

Subject to a series of conditions and approvals, the investors intend to pay Rosemont Re a fixed up-front payment of approximately US$2.5 million for its existing infrastructure and 8% commission payments based on the renewing Rosemont Re business once it is bound by the new reinsurer in 2006.