Reinsurance sidecars are limited-life, special-purpose reinsurers that, during favorable pricing and underwriting conditions, provide investors exposure to reinsurance risk while allowing sponsor insurers and reinsurers an additional source of capacity and the opportunity to leverage their infrastructure by earning profit commissions. Sidecars emerged as an alternative to newco reinsurers during the hard market after Hurricane Katrina in 2005. Many industry observers are predicting that the series of tragic natural disasters over the past several months may trigger a renaissance of sidecars.

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