what is believed to be one of its first deals, helping to provide loss protection against hurricane risk.

Arrow Re provide a property catastrophe excess of loss reinsurance contract to Constitution Re, a New York-based reinsurer, according to a Press release by Goldman Sachs Group, L.P.

Arrow Re, along with E.W. Blanch Capital Markets, hedged the bulk of the exposure by entering into a series of industry loss warranty contracts against industry-wide losses with a variety of reinsurers.

GS Risk Advisors and Swiss Re New Markets then created securities which transferred and securitised the difference between the Constitution Re contract and the industry-based contracts, and sold them to investors.

The transaction resulted in a new layer of protection against Gulf and East Coast US hurricane risk for Constitution Re.

"This transaction, one of the first of its kind, allowed Constitution Re to take advantage of the risk-bearing capacity available in industry-loss-based markets to create retrocessional coverage,'' Goldman Sachs stated.

Arrow Re, a wholly owned subsidiary of Goldman Sachs, was set up as what is being called a transformer company. A transformer is a company designed to transfer reinsurance risk to the capital markets by issuing securities or entering into derivative contracts.

Goldman Sachs also indirectly owns GS Risk Advisors.

Moody's rating agency has assigned an A1 insurance financial strength and an A1 counterparty ratings to Arrow Re. Fitch IBCA and Duff & Phelps has assigned the company an "A plus''.

Goldman is obligated to maintain Arrow RE's statutory net worth to $1 million all the time and provide funds of up to $1 billion.