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Everest Re Creates Insurance SPV

PRE RNR RE

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Everest Re Group Ltd. (RE - Analyst Report) has formed Mt. Logan Re, Ltd., a special-purpose insurance vehicle, creating additional reinsurance capacity for the aggregate retrocessional reinsurance market.

While Everest Re has capitalized the new unit with $50 million, $200 million will be contributed by the investors to reach the initial target capacity of $250 million.

The formation of Mt. Logan Re, Ltd. will increase Everest Re’s reinsurance capacity to cater to the global retrocessional reinsurance market. Retrocessional reinsurance refers to partial underwriting of the reinsurance risk of one reinsurance company by another.

This new special purpose insurance vehicle will help Everest Re meet its clients’ capital requirement. The company will also facilitate the participation of investors in the retrocessional reinsurance market.

Everest Re Group is a worldwide multi-line reinsurance and insurance organization with a strong brand recognition, experienced management team and Board of Directors.  It also benefits from a diversified book of business – Reinsurance/Insurance; Property/Casualty; U.S./Non U.S.

Earlier during the month, peer RenaissanceRe Holdings Ltd. (RNR - Analyst Report) announced the formation of Upsilon Reinsurance II Ltd. (“Upsilon Re II”), a new Bermuda domiciled special purpose insurance vehicle, creating additional reinsurance capacity for the worldwide aggregate retrocessional reinsurance market.

Another company, PartnerRe Ltd. (PRE - Analyst Report), is also active in collateralized markets.

Everest Re is scheduled to release its fourth-quarter 2012 earnings after trading closes on February 6, 2013. The Zacks Consensus Estimate is projected at 32 cents per share compared with an operating loss of 94 cents per share, reported in the year-ago quarter.

Everest Re retains a Zacks Rank #3 (Hold). We are also maintaining our long-term Neutral recommendation on its shares.  
 

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