Assets of the new reinsurer, which will target high-margin property-catastrophe and low-severity casualty business, will be invested in Cohen's hedge fund.

Founding investors of SAC Re include Capital Z Partners, a major investor in the Bermuda-reinsurance market with a history of being behind the launches of Endurance Specialty Holdings and Lancashire Holdings Ltd., says SAC Re in a statement.

Insurance-ratings agency A.M. Best Co. on July 9 gave SAC Re a financial strength rating of “A-minus” on the first day of the company's operations.

A.M. Best says it is “concerned that there is a possibility that SAC Re could be exposed to a convergence of events due to the adjoining of underwriting risk and the present risk in an alternative investment strategy.”

But the ratings agency adds, “However, SAC Re's low underwriting leverage, experienced underwriting team, partially hedged nature of the portfolio along with its investment manager's lengthy investment track record help mitigate these concerns.”

The move adds more capital to a market already overcapitalized despite record catastrophe losses in 2011. Ample capacity has contained expected rate increases.

Reinsurance renewals continued to firm at July 1 renewals, but ample capacity is offsetting some pricing pressures, says reinsurance broker Guy Carpenter.

Simon Burton was named chief executive officer of SAC Re. Burton is formerly of Lancashire.