Montpelier Re Holdings Ltd. is investing $133 million in new Bermuda reinsurer, Blue Ocean Reinsurance Ltd.

Blue Ocean, which will offer retrocessional protection, or reinsurance for reinsurers, in the property catastrophe market, has been capitalised with commitments for $300 million of common and preferred equity, including the investment by Montpelier. Blue Ocean will provide fully collateralized retrocessional protection to parties other than Montpelier and has no current plans to obtain a rating from any rating agency, according to a statement released by Montpelier yesterday.

Anthony Taylor, chairman, president and chief executive of Montpelier, said: ?We are extremely pleased to have completed this significant step in our announced plans to pursue non-traditional approaches to the management of our business. The separate capitalisation of Blue Ocean will allow us to take advantage of favourable underwriting opportunities efficiently in what has become one of the most capital-intensive classes of reinsurance.?

Blue Ocean initially anticipates underwriting gross aggregate policy limits in excess of $350 million.

Montpelier subsidiary Montpelier Agency Ltd. will perform underwriting services for Blue Ocean, enabling Montpelier to leverage its skill set on a capital base distinct from Montpelier Reinsurance Ltd.

John Bassett, a director of Montpelier Agency Ltd. and previously responsible for Montpelier?s retrocessional business, will oversee the underwriting.