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ARTICLE · 21 DECEMBER 2006

An Introduction To Sidecars

CMS Cameron McKenna Nabarro Olswang
Explore more from CMS Cameron McKenna Nabarro Olswang

Hiscox Syndicate 33 recently became the first Lloyd’s syndicate to enter into a sidecar transaction. This highlights the growing prominence of the sidecar as a capital-raising vehicle for property catastrophe risks.

United KingdomInsurance
Stephen Crabb
Stephen Crabb
Dessa Miller
Dessa Miller

Hiscox Syndicate 33 recently became the first Lloyd’s syndicate to enter into a sidecar transaction. This highlights the growing prominence of the sidecar as a capital-raising vehicle for property catastrophe risks. This article sets out the principal characteristics of reinsurance sidecars and highlights the key points for both parties, including the importance of thorough due diligence and the need for the sponsor to be satisfied that the quota share reinsurance agreement protects its interests.

  • How did the sidecar emerge?
  • What is a sidecar?
  • Advantages for the sponsor
  • Advantages for the investor
  • Disadvantages
  • Comparison with catastrophe bonds
  • The future

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