A new Bermuda-based property catastrophe reinsurance company called Partner Re is set to start business in November.

Swiss Reinsurance Company, the world's second largest reinsurance firm, is taking a 15 percent stake in Partner Reinsurance Company.

Partner Re is the latest in a flood of new reinsurance companies choosing Bermuda as their domicle.

The new company is intended to ease the capacity shortage in the disasters and natural catastrophe reinsurance market.

Total capital, after an "imminent'' public offering, is expected to be $700 million.

Zurich-based Swiss Re and New York-based merchant bank John Head & Partners, Limited Partners, are the principal investors.

The company has commited capital of $225 million, including $100 million from Swiss Re and $25 million from affiliates of John Head & Partners. An additional $130 million is provided by unnamed institutional investors.

Counsel for Partner Re, local law firm Appleby, Spurling and Kempe, has filed a prospectus with the Securities Exchange Commission for an Initial Public Offering.

The public offering is anticipated to raise an additional $500 million in the capital markets in the USA, Europe and Japan.

Management company International Risk Management (Bermuda) will be the principal representative for Partner Re, providing administrative management services.

IRMG president and chief executive officer Mr. Arthur Deters said the decline of the Lloyds market was not the sole cause of the worldwide capacity shortage.

"Lloyds has had capacity withdrawn, but there are many other reinsurers who have also had to reduce capacity and some who have ceased trading,'' he said.

"There are not that many reinsurers selling catastrophe reinsurance so the demand is high currently.'' Partner Re will concentrate on property business, which includes fire insurance, and also cover storm, flood, earthquake and other natural hazards.

Partner Re will not transact casualty business.

A statement issued by Swiss Re cited the dramatic increase in the frequency and severity of catastrophe and large loss events and the lack of catastrophe capacity as the reasons for forming Partner Re.

"Severe catastrophes led to demand on the international reinsurance market for reinsurance cover against the economic consequences of natural hazards which far outstripped the available capacity.

"Because of the financial burden arising from large loss events in recent years and the pessimistic assessment of future trends, many providers of such covers have either withdrawn or have had to cut back their acceptances substantially,'' stated the release.

Mr. Herbert Haag will be chief executive officer at Partner Re. Swiss Re owns 70 percent of IRMG (Bermuda). Its other interests in Bermuda are wholly-owned subsidiary Englewood Reinsurance Company, a specialty financial reinsurer, formed in 1989 and also Property Insurance Facility, a small specialty property insurance company.