The Bermuda reinsurer set up by John Paulson, the American hedge fund manager, appears to be no longer writing reinsurance coverage.

The news came out last night in a statement from Bermuda reinsurer Validus Holdings, which said its third-party capital management arm, AlphaCat Managers Ltd, had seen assets under management grow by 70 per cent over the past year to $2.4 billion.

Mr Paulson, who was famous for making billions of dollars by correctly forecasting the subprime mortgage crisis, set up PacRe in conjunction with Validus in 2012.

“This $2.4 billion figure is inclusive of third-party assets under management of $2.1 billion, Validus stated. “All numbers referred to above exclude the assets of PaCRe, Ltd, as this entity was off risk effective January 1, 2016.”

There was no further explanation.

PaCRe’s ratings were withdrawn by credit rating agency AM Best last August at the reinsurer’s request.

Investment losses suffered by the hedge fund Paulson & Co have hampered PaCRe’s performance.

In recent years, several hedge fund-backed reinsurers have set up in Bermuda, including Third Point Re, whose assets are managed by Dan Loeb’s Third Point LLC.

The firms, which tend to take more investment risk and less underwriting risk than traditional reinsurers, have come under scrutiny from US tax authorities. The US Treasury wants to establish guidelines for what constitutes a bona fide reinsurer, as it believes some of these entities are investment vehicles disguised as reinsurers in order to slash their US tax bill.

Lixin Zeng, AlphaCat Management’s chief executive officer, was delighted with the growth achieved by the alternative capital arm.

“We are thrilled to reach the milestone of $2 billion of third party assets under management,” Mr Zeng said.

“Through the AlphaCat/Validus platform, we have deployed all of the available capital consistent with our disciplined underwriting standards. The continued growth of AlphaCat reflects investor confidence in our franchise and reaffirms the strategic value of AlphaCat to the Validus Group.”