Hamilton Re Creates Capacity with New Special Purpose Vehicle, Turing Re

Kathleen Reardon, CEO of Hamilton Re

Hamilton Re, the Bermuda-based operations of Hamilton Insurance Group, has announced that it has established its first special purpose vehicle, Turing Re Ltd. Turing Re will provide collateralized capacity for Hamilton Re’s global reinsurance portfolio.

Turing Re is funded with $65 million of capital, raised in a private placement syndicated among multiple investors, to provide support for Hamilton Re's property treaty book of business.

"This transaction represents an exciting next step in the evolution of Hamilton Re as a diversified company meeting the needs of our current and future clients," said Hamilton Re CEO Kathleen Reardon.

For additional clarity, an excerpt from Chapter 10 of Captives and the Management of Risk on the topic of the captive as a special purpose vehicle is provided below.

The Captive as a Special Purpose Vehicle

The risk securitization transactions that have been accomplished so far have used a special purpose vehicle (SPV) to access the capital markets. If the risk to be securitized is the risk of an insurance or reinsurance company, the SPV may be formed as a nonaffiliated captive insurance company. This is because the objective for an insurance or reinsurance company, when securitizing risk, is to remove the liability for payment of future losses from the balance sheet, without creating on balance sheet debt. If the reinsurance company simply issued risk bonds directly, or through a subsidiary, it would still have the liability to repay the bonds and would not have reduced its loss reserves by a corresponding amount.

If you subscribe to Captives and the Management of Risk on IRMI Online or ReferenceConnect, you can read more about SPVs and other complex topics. If you don’t subscribe, learn more here.