The co-founder of Bermuda giants Ace Ltd. and XL Capital has set up another Island-domiciled insurance company backed by more than $1 billion in capital.

The latest project of insurance legend Robert Clements is Ironshore Insurance Ltd., a subsidiary of Ironshore Inc., which announced yesterday that the class four insurer was created “in response to the crisis conditions in the United States property catastrophe insurance markets”.

Ironshore Inc. said the $1 billion capital had been raised through a private share placement. Ironshore Insurance was incorporated last October.

The new company’s staff will be based in Bermuda, on the third floor of the Swan Building in Victoria Street, with a team headed by chief executive officer Robert Deutsch and president and chief underwriting officer Leslie Rock.

“In the wake of Hurricane Katrina and other notable catastrophic events over the past two years, tens of billions of dollars have flowed into the reinsurance sector, but to date, permanent, adequate capacity has not been established on the insurance side,” Mr. Deutsch said.

“Ironshore is very pleased to be able to provide significant new insurance capacity with a substantial, unencumbered capital base and a proven, strong management team.”

Robert Clements, who has founded Ironshore with John Clements through their investment vehicle Tara Partners Fund, has made a huge mark on Bermuda’s insurance industry over the past two decades.

Together with Robert Newhouse, Mr. Clement founded what are now the island’s two biggest companies, Ace Ltd. and XL Capital, in the 1980s. He also founded Mid Ocean Ltd. and Arch Capital Group and was a top executive and director at insurance brokers Marsh & McLennan for 16 years.

He served on the board of XL from its formation in 1986 until 2002 and also helped to form Integro Insurance Brokers in New York in 2005.

Mr. Clements said: “Integro initiated the idea of Ironshore as an independent, open-market facility available to all brokers, which we know from experience works best for all concerned.”

Mr. Deutsch has 25 years’ experience in the insurance business, while Mr. Rock has long been recognised as the leading property underwriter at Lloyd’s, having served as chief property underwriter for three of its leading property syndicates over the past 25 years.

Mitchell Blaser, most recently the chief financial officer of Swiss Re America and Marsh Inc has been appointed Ironshore’s CFO.

The major investors in Ironshore Insurance include the Bear Stearns Merchant Banking, Greenhill Capital Partners and Corporate Business Partners (a business unit of Lazard Alternative Investments).

A report released this week by insurance broker Willis Group said that reinsurance rates were holding steady or slipping by five or 10 percent in most parts of the world, but were up by as much as 40 percent in hurricane-prone areas of the US.

Yesterday’s statement from Ironshore made clear that the new company would home in on that market: “This newly formed global insurance company was created in response to the crisis conditions in the US property catastrophe insurance markets, a result of unprecedented hurricane activity in recent years and subsequent changes in the insurance industry that make such coverage capital intensive and much more costly.

“Initially, Ironshore will write a world-wide book of property business. Because of marketplace demands, the company’s initial focus will be on commercial risks with wind exposures in the catastrophe-prone coastal states such as Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Texas, as well as the Caribbean and Yucatan Peninsula. Ironshore will also provide commercial earthquake coverage in California.”