NEW YORK (Bloomberg) ? Julian Robertson, who once ran the world?s biggest hedge fund, put $25 million in a fund that targets insurance companies, now facing record losses from Hurricane Katrina.

Robertson, who made his name picking stocks considered cheap relative to earnings, invested in the Firemark Tiger Fund LP, according to a US regulatory filing. The hedge fund is being run by Michael Morrissey. Robertson, 73, and Morrissey, 57, who have known each other since the 1970s, may open the fund to outside investors depending on how it performs.

?Hurricane Katrina, the four Florida hurricanes last year, 9/11 and other large catastrophes have really created sweeping changes in the industry,? said Morrissey, whose Firemark Group in Santa Fe, New Mexico, has provided research and managed insurance stocks for two decades. ?That is what we are trying to take advantage of.?

Robertson stopped managing hedge funds five years ago after he missed a rally in Internet stocks and his funds under-performed, leading to investor withdrawals of $16 billion. Now, he invests in other managers? hedge funds. Robertson, whose net worth Forbes magazine estimated last year at $850 million, declined to comment.

Storms and terrorist attacks are altering the way companies and individuals buy insurance, the way insurers plan for the frequency and severity of losses, and even the types of insurance that must bear the costs, Morrissey said in an interview. For instance, business interruption and workers? compensation coverage may have to help pay for potential claims from Hurricane Katrina.

In addition to property-casualty insurance, Morrissey will invest in the life, health, auto and reinsurance businesses.

Firemark Tiger is a long-short equity fund, meaning it buys shares of companies that Morrissey expects to rise and bets against others through short sales. A short seller borrows a company?s stock and then sells the shares, hoping they decline in value and can then be replaced at a lower cost.

Morrissey said he previously invested on behalf of insurers such as New York-based AIG and General Re Corp., a unit of Warren Buffett?s Berkshire Hathaway Inc. They didn?t want to bet against their industry, so Morrissey stuck to purchasing stocks he expected to gain in value. The Robertson-backed hedge fund is his first chance to profit from research that uncovers insurers poised for a decline.