Reinsurance Sidecar
A short-term special purpose vehicle that provides quota-share capacity to a reinsurer, funded by third-party ILS capital.
A reinsurance sidecar is a special purpose vehicle (SPV) that takes a proportional share of a reinsurer's book of business — typically for one year — funded by third-party capital from ILS investors. The SPV receives the same proportion of premiums as it assumes of losses.
Sidecars are most commonly launched following major catastrophe events when reinsurance pricing is elevated, allowing established reinsurers to write more business without permanently growing their balance sheet. Notable examples include RenaissanceRe's DaVinci Re, Lancashire's Kinesis, and multiple Bermuda-domiciled sidecars following the 2005 and 2017 hurricane seasons.
Sidecars are private, illiquid, and available only to institutional investors — contrasting with publicly traded catastrophe bonds.
Example usage
“RenaissanceRe launched DaVinci Re as a sidecar to write a 40% quota share of its property catastrophe excess-of-loss book.”
Frequently asked questions
What is Reinsurance Sidecar?
A short-term special purpose vehicle that provides quota-share capacity to a reinsurer, funded by third-party ILS capital. A reinsurance sidecar is a special purpose vehicle (SPV) that takes a proportional share of a reinsurer's book of business — typically for one year — funded by third-party capital from ILS investors. The SPV receives the same proportion of premiums as it assumes of losses.
How is Reinsurance Sidecar used in practice?
RenaissanceRe launched DaVinci Re as a sidecar to write a 40% quota share of its property catastrophe excess-of-loss book.
Related terms
More Insurance-Linked Securities terms