TORONTO, June 30, 2017 (GLOBE NEWSWIRE) -- Crosswinds Holdings Inc. (TSX:CWI) ("Crosswinds" or the “Company”) is pleased to provide an update on Crosswinds Re’s activities during the 2017-2018 reinsurance placement season.
Reinsurance Conditions
The Company capitalized its reinsurance subsidiary, Crosswinds Re, with USD $2 million. Crosswinds Re reviewed business opportunities to provide coverage to primary Florida insurance carriers for the 2017-2018 treaty year and determined that the available opportunities did not meet its risk-return criteria. Other opportunities may present themselves during wind season which typically runs through to the end of October 2017 although there can be no certainty that will be the case. In the meantime, Crosswinds Re intends to look at appropriate opportunities to invest the funds allocated for its reinsurance activities in order to partially offset its operational expenses.
Underwriting Services Agreement
Crosswinds and Crosswinds Re entered into an underwriting services agreement (the “Underwriting Agreement”) with Transatlantic Reinsurance Company (“TransRe”) pursuant to which Trans Re has agreed to act as strategic advisor to Crosswinds Re providing information on structuring, pricing, risk assessment and market conditions for reinsurance business being assessed by Crosswinds Re.
The Underwriting Agreement is for an initial term of 5 years with the option to renew for successive 2 year terms, subject to earlier termination. As compensation for its services, Trans Re receives a management fee calculated at a rate of 2% of the underwriting capital utilized by Crosswinds Re in an applicable year. For 2017, TransRe is entitled to a stand by fee of USD$50,000 in a year where Crosswinds Re does not write any business. TransRe is also entitled to a incentive fee equal to 10% of the gross increase in enterprise value over a 7% compounded high water mark on the occurrence of a liquidity event for Crosswinds Re or to a termination fee in certain circumstances. The full terms are contained in the Underwriting Agreement a copy of which is available on under the Company’s profile on SEDAR at www.sedar.com.
Crosswinds’ CEO, Colin King, commented, “We are excited that Crosswinds Re has been fully established as part of its proof of concept. While we had hoped to write some business this season, we are opportunistically exploring deploying capital and will pass on business when our risk-return targets cannot be achieved. The 2017 renewal rates we have seen to date did not satisfy our risk adjusted return targets.”
Crosswinds Holdings Inc.
Crosswinds is a publicly traded private equity firm and asset manager targeting strategic and opportunistic investments in the financial services sector with a particular focus on the insurance industry.
Crosswinds Re
Crosswinds Re is subsidiary of Crosswinds and a class B(iii) licensed reinsurer in the Cayman Islands. Crosswinds Re is additive to Crosswinds' primary insurance ventures and forms an integral part of Crosswinds' future growth and acquisition strategies.
Caution Regarding Forward-Looking Information
This release includes certain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue” or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These forward-looking statements are subject to a number of risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. Reference should be made to the risk factors in the Company’s most recent Annual Information Form, in the Management’s Discussion and Analysis and in our other filings with Canadian securities regulators. Additional important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, interest rates, tax related matters, loss of personnel, reliance on key personnel, ability of the Company to generate positive future returns for investors, ability of the Company to execute its strategies from time to time; and the receipt of any regulatory approvals or consents required from time to time.