TARTAN BOND STRATEGY
We have initiated a unique bond strategy which enables TARTAN RE to participate in a portion of the yield of the bond portfolio and significantly increase its reinsurance subsidiary capacity to write reinsurance business.
SECURED REINSURANCE BONDS
TARTAN RE and TARTAN RE HOLDINGS Ltd. benefit from this strategy in two ways. The first benefit is the holding company TARTAN RE will receive a portion of the yield above a designated yield from the investment management of the bond portfolio. This portion of the yield from the bond can be used for general administration, reserves, capital and surplus, increase capacity for writing new business for its subsidiary TARTAN RE HOLDINGS Ltd., or for declared dividends to shareholders, or other corporate purposes.
The second benefit is for TARTAN RE HOLDINGS Ltd., which can utilize a portion of the secured reinsurance bond portfolio assets to increase its capacity to write its reinsurance business. In return, profit from only the reinsurance business written against the bond portfolio assets can be used to supplement any deficiency in the yield to the bondholders. If the yield from the bond portfolio investments are sufficient to pay the bondholders their required yield, then TARTAN RE HOLDINGS Ltd., receives the full profit from the reinsurance business it provided associated with the bond portfolio assets utilized. Any other reinsurance business written not associated with the bond portfolio assets are not affected and not part of this strategy.
TARTAN RE and TARTAN RE HOLDINGS Ltd. assumes no liability for the bonds or the required yield in this strategy other than its usual and customary risk associated with writing its typical reinsurance business.
A mutually positive benefit for both parties. A win-win unique strategy for the TARTAN RE shareholders and the bondholders.