Clifford Chance

Clifford Chance Advises Harrington Re Ltd. on its Formation as a New Bermuda-Based Reinsurance Company

Innovative investment model again proves to be the optimal deal structure for total return insurance ventures.

Leading international law firm Clifford Chance has advised on the formation and capital raising of Harrington Reinsurance Holdings Limited (“Harrington”) and its wholly-owned subsidiary, Harrington Re Ltd., the latest specialty insurance and reinsurance company to employ a novel hybrid investment model.

In advising on the deal, New York-based Insurance/M&A partner Gary Boss drew upon expertise gained from his growing body of work in total return insurance companies, beginning with the groundbreaking and award-winning US$1.13 billion capital raise for Watford Holdings in 2014. That investment model paired Watford Re with an alternative investment strategy – a first-of-its-kind approach at the time – that positioned Watford Re to generate attractive risk-adjusted returns for its shareholders while delivering unique underwriting solutions. Given Mr. Boss's track record on several successful deals, a number of sponsors have approached Clifford Chance to advise on similar reinsurance companies.

Harrington has raised approximately US$550 million of equity and US$50 million of debt for its operations, including equity investments by a subsidiary of AXIS Capital Holdings and by affiliates of The Blackstone Group. AXIS has been appointed Harrington Re’s exclusive liability manager and Blackstone its exclusive investment manager. Harrington Re is a Class 4 insurer licensed by the Bermuda Monetary Authority and has received a financial strength rating of A- from A.M. Best Company.

Harrington Re will combine a multi-line reinsurance portfolio with a diversified allocation to alternative investment strategies positioned to generate attractive shareholder returns over the long term. The Company's strategy is to build a portfolio that optimizes the risk-reward characteristics of assets and liabilities, drawing on the respective strengths of AXIS Capital and Blackstone, while deploying a disciplined and fully integrated approach to underwriting and investing.

Led by Mr. Boss, the Firm's cross-border, multidisciplinary team included Tax partner Mike Seaton; Capital Markets partner Per Chilstrom; Benefits/Executive Compensation partner Howard Adler; Funds/Private Equity counsel John Kelley, IP counsel Daryl Fairbairn and associates Dean Agnos, Analisa Dillingham, Kirsten Gaeta, Satbir Walia, Sarah El-Ghazaly and Allison Sherrier.

Clifford Chance is the established market leader in alternative capital reinsurance ventures, with successful representations beyond Harrington Re and Watford Re. For example, Mr. Boss represented Fidelis Insurance Holdings Limited in its formation and 2015 equity capital raise of approximately US$1.5 billion – one of the largest insurance industry capital raises – and continues his active role in advising on deals currently under way in this market.