White Mountains' Chairman Jack Byrne offered reassuring words to shareholders yesterday concerning the wipeout of original investors in a reinsurance sidecar as a “sorry chapter” in the history of such vehicles.
During a conference call, Mr. Byrne responded to concerns of analysts and investors in Bermuda-based White Mountains Insurance Group that bubbled up after a series of announcements last week regarding reinsurance subsidiary Folksamerica Reinsurance Company and its sidecar, Olympus Reinsurance.
A sidecar is essentially a special-purpose vehicle in which third-party investors, such as hedge funds or private equity funds, collaborate with an underwriter to provide additional capacity to existing reinsurers for short-tail lines of business.
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