1 April 2014News

Watford Re’s $1b capital raise indicative of bullish market

Watford Re has announced that it has completed a $1.13 billion capital raise that provides some indication of investor appetite for reinsurance stock.

The newly-launched, Bermuda reinsurer – a joint venture between Arch Capital and Highbridge Capital Management – will combine a diversified reinsurance book with an “investment strategy comprised primarily of non-investment grade credit assets, which it believes will generate attractive risk-adjusted returns for its shareholders over the long term.”

Entering the market capitalised to $1 billion, it is apparent that the reinsurer recognises the importance of scale, and the need to make something of a splash in a market characterised by strong competitive dynamics.

John Rathgeber will lead the Watford Re team, with Jon Levy as CRO and Roderick Romeo as CFO, while Walter Harris is stepping in as chairman of the board.

Marc Grandisson, chairman and CEO of Arch Worldwide Reinsurance and Mortgage Groups and Nicolas Papadopoulo, chairman and CEO of Arch Reinsurance, have joined Watford’s board.

Commenting on the new entity, Grandisson says: “Our partnership with Watford is driven by the opportunity we see to underwrite attractive medium-to long-tail, multi-line business. We look forward to working with Watford to serve the reinsurance needs of its clients and build long-term value for its shareholders.”