Liberty Mutual’s Limestone Re heralds a return to leveraging third-party capacity

Liberty Mutual Insurance has launched a new capital markets platform that will initially leverage the newly-formed Bermuda-based Limestone Re to offer the insurer easy access to fully-collateralised third-party reinsurance capacity.

Its new Limestone Capital Markets platform will initially use an inaugural multi-year collateralised ‎reinsurance transaction led by Bermuda domiciled segregated account company, Limestone Re.

The Limestone platform has been capitalised with approximately $160 million of investors' capital and provides investors will access to risks from US property-catastrophe business, US homeowners’ business and London Market specialty insurance.

Liberty Mutual has taken a very proactive approach to its use of reinsurance and third party capital for many years and has previously used insurance-linked securities to provide it with access to this form of capital. However, it has indicated that the costs and time associated with structuring such transactions had become prohibitive – certainly at a time reinsurance has been relatively cheap. Its last cat bond was in 2012.

James Slaughter, Liberty Mutual senior vice president and director, Global Reinsurance Strategy, said: "The creation of the Limestone platform is a key strategic initiative for Liberty Mutual. This transaction demonstrates investors' interest in both traditional property catastrophe reinsurance risks as well as insurance risks including homeowners, marine and other global specialty insurance lines.

“The Limestone platform demonstrates Liberty Mutual's ability to leverage our unique global underwriting and distribution platform as we bring capital markets investors as close as possible to the underlying risks."