Reinsurance sidecar

{
  "id": "MLC-T-INS-002858",
  "term": "Reinsurance sidecar",
  "field": "Insurance and risk management",
  "definition": "A special purpose vehicle created to provide a sponsoring reinsurer with additional underwriting capacity by accepting a quota share of a specific book of business. Investors, such as hedge funds or private equity, provide the capital for the sidecar, which operates for a fixed term, and they share in the profits and losses from the underwritten risks. Sidecars are structured as fully collateralized entities, meaning the investors' capital is held in trust to cover all potential claims, isolating the sponsor from credit risk.",
  "url": "https://mlchart.com/terminology/insurance/reinsurance-sidecar/"
}