Aeolus Re has entered the Bermudian market with an initial capitalisation of up to $500m.

It will be financed by a group led by Warburg Pincus and the company's founders, Peter Appel and David Eklund. Arch Capital Group has also agreed to invest in the company, subject to Board approval.

Aeolus Ltd., through its wholly-owned subsidiary, Aeolus Re, will operate as an unrated reinsurance platform initially targeting the property catastrophe segment of the worldwide reinsurance market. Aeolus Re will provide property catastrophe protection to insurers and reinsurers on both an ultimate net loss and industry loss warranty basis.

Eklund said that other recent entrants into the property reinsurance market have noted that demand for property catastrophe reinsurance capacity has outstripped supply following the 2004 and 2005 hurricane seasons.

“This imbalance continues to grow, driven in part by the changes in rating agency guidelines and catastrophe models that have significantly increased capital requirements for rated reinsurers,” he added.