Harrington Re gets warm welcome from cedants

Harrington Re, the new reinsurance venture by AXIS and alternative asset manager Blackstone, which raised $600 million in July this year, has been warmly received by potential clients so far as it moves into its first renewals, Jay Nichols, the chief executive of AXIS Re, told PCI Today.

Nichols, a pioneer in the structure of alternative reinsurance vehicles and sidecars, admitted that AXIS has been relatively late launching such a vehicle, now widely used by many reinsurers. Nichols, a former president of RenaissanceRe Ventures was responsible for the formation of DaVinci Reinsurance and Top Layer Reinsurance, as well as several sidecars and other ventures.

“When I joined AXIS one of my objectives was to start something with third party capital but I was also very clear that it had to be a case of matching the right capital with the right risks,” he said. “We did nothing in that space at that time but we now have a great team of people and I think we are in a great space with Harrington Re.”

He stressed that each venture of this nature is unique. Although it will write some short-tail business, Harrington Re will focus more on long-tail casualty lines leveraging the expertise of Blackstone on the asset side of the business. It will also not market to clients in its own right; instead, it will sit behind AXIS, allowing the re/insurer to write bigger lines on business it likes.

“It is a great platform. It will stand behind us and allow us to offer more capacity for clients,” he said. “That is a very different execution strategy compared with some other vehicles of this type.

“Our aim is to not create any confusion in the market—it will not compete for capacity, it will simply allow us to match the right capital with the right risk. If there is business we liked before, it will allow us to do more of it. But we will not reduce what we did as AXIS.”

He added that as it is one of the few such vehicles to be writing long-tail business, some education is needed with regards to clients. But their reception of the vehicle has been warm so far.

“They are positive in the sense that more capacity is good for them,” Nichols said. “Blackstone is a phenomenal partner to have and I feel we have a fairly forward-leaning stance in the market. We need to be disciplined but I am confident that we will do OK.”

Of the $600 million Harrington raised, AXIS Capital made a $100 million equity investment via a subsidiary and The Blackstone Group invested approximately $50 million.

AM Best has awarded Harrington Re with a financial strength rating of A- (Excellent). Bill Fischer, formerly the chief underwriting officer at AXIS Reinsurance, has been appointed as its chief executive officer.