Bermuda-based Harbor Point Re Limited, a subsidiary of Harbor Point Limited, has announced the completion of the formation of Bay Point Re, described as "a special purpose 'sidecar' vehicle formed for the purpose of reinsuring certain short-tail business written by Harbor Point."

The two entities have entered into a quota share reinsurance agreement "pursuant to which Harbor Point will cede to Bay Point 30 percent of certain lines of short-tail business written by Harbor Point for the 2006 and 2007 underwriting years," said the company. "The quota share will be collateralised by a trust established by Bay Point that will include the capital and surplus of Bay Point, as well as the ceded reinsurance premiums received from Harbor Point. Several funds managed by Golden Tree Asset Management, LP are the principal investors in Bay Point."

Harbor Point was created as a spin-off of the reinsurance operations of Chubb Re, a subsidiary of Chubb Corp.