Catlin and China Re will establish a new Lloyd’s syndicate in the first direct Chinese investment into Lloyd’s.

The partnership between Catlin and the state-owned China Re is intended to increase their knowledge of each other’s markets.

Catlin CEO Stephen Catlin says the quota-share reinsurance underwritten by Syndicate 2088 will allow the company to increase premium volume in 2012, at a time when rates are expected to rise for some classes of business, without going to shareholders for new capital.

“More importantly, I believe that the group’s partnership with China Re will lead to our increased understanding of the Chinese marketplace, which will produce significant advantages for Catlin in the years ahead,” he said.

China Re Chairman Li Peiyu says the company wants to grow internationally.

“This new venture will not only help us to gain a better knowledge of Lloyd’s and benefit from its worldwide network, but it will also increase China Re’s experience of international reinsurance operations and management and help build a foundation for China Re to grow into an important player in the world reinsurance market,” he said.

China Re had gross premium income of RMB38.13 billion ($6.2 billion) in 2010 and has an A (Excellent) rating from AM Best. It operates life as well as property and casualty reinsurance, as well as insurance and brokerage subsidiaries and a nuclear insurance pool.

Catlin established offices in Hong Kong in 2006 and Shanghai in 2007, and is the largest participant in Lloyd’s China, which was established in 2007.