Bermuda-based Lancashire Holdings Ltd has announced the launch of Accordion Reinsurance Ltd, a fully collateralised sidecar quota share reinsurance arrangement with a capital draw-down feature.Accordion will be flexibly capitalised for up to $250 million, and will act as a quota share reinsurer of Lancashire Insurance Company Ltd on its worldwide property retrocession business.Lancashire Group CEO Richard Brindle said: “This is another exciting chapter in the Lancashire story. This demonstrates our ability to act nimbly when excellent underwriting opportunities arise, and to manage our capital flexibly through the underwriting cycle.“The accumulation of international property catastrophe losses during 2010 and 2011, which in many cases were at or above companies’ disclosed RDS scenarios in the affected territories and elsewhere, combined with the expected impact of the new RMS version 11, have changed the perception of catastrophe risk. They have combined to reduce the amount of available reinsurance capacity and increase the demand for property retrocessional coverage.“Lancashire is well positioned to take advantage of these developing underwriting opportunities, particularly in the event of an active US storm season. We have listened to our clients, brokers and investors and have moved quickly to establish the Accordion facility.” Elaine Whelan, chief financial officer of Lancashire, said: “The capital draw down facility which we have developed for the Accordion facility is intended to ensure that capital is available as and when underwriting opportunities arise, and is only deployed once attractive business materialises. This is classic Lancashire, and fits perfectly with our capital management philosophy.“We believe underwriting opportunities should always be the driver of capital needs, and the developing retrocession market fits well with this adaptable side car product. The draw down feature will improve the return on capital for investors in Accordion, whilst allowing Lancashire to take advantage of the best priced opportunities in the coming months.”All contracts reinsured by Accordion will be collateralised for the benefit of Lancashire to the full extent of Accordion’s potential policy liability. Subject to authorisation by the Bermuda Monetary Authority, Accordion will be a Special Purpose Insurer.Accordion’s holding company is owned by a small group of capital providers. Lancashire will invest up to $50 million in the structure.