Marsh launches property catastrohpe sidecar

Marsh Inc. announced the creation of MaRI (Marsh Risk Innovations), a reinsurance sidecar that will provide additional capacity to the depleted property catastrophe insurance market.
Sidecars have gained popularity in the wake of Hurrican Katrina and are essentially financial structures created to allow investors to take on the risk and return of a group of insurance policies and earn the risk and return that arises from that business.
The additional capacity will be made available through reinsurance provided by MaRI, Ltd to ACE, a leading Bermuda-based insurance company, explains a Marsh release.
“This new facility provides large corporate clients of Marsh with exclusive access to insurance capacity intended to fill gaps that are creating instability and shortfalls in property catastrophe risk coverage.”
MaRI’s structure is unique when compared to traditional sidecar models, information from the firm explains, because it “provides Marsh clients with direct access to capital markets through a highly-rated ACE delivery vehicle.
Marsh collaborated with ACE and Morgan Stanley, which served as structuring advisor and placement agent, to create MaRI.
In the aftermath of the 2005 hurricane season in some regions of the U.S. property catastrophe insurance rates have quadrupled.
Marsh anticipates that the ACE/MaRI program will deliver US$400 million in extra capacity during the coming three months, a statement from Marsh says.
“Depending upon client demand, market conditions and other factors, Marsh believes this approach could provide more than $1 billion in total extra capacity over the next year.