A new reinsurer has launched operations in Bermuda.

Swan Re, owned by Swan Group Holdings, has set up shop in the Island — with the aim of offering high returns based on a low risk strategy.

And Swan Group said that shares are now being offered to investors with a minimum of $1 million available to back the new firm.

Swan Re’s reinsurance business will be sourced by Bermuda company MultiStrat Re through a quota share reinsurance agreement alongside other participating reinsurers.

Randy Swan, chairman of Swan Group Holdings, said: “We are pleased to offer investors an opportunity to seek high returns by combining our low risk defined risk strategy (DRS) with MultiStrat Re’s stable, low volatility reinsurance business.”

The DRS model is designed to not lose capital during market downturns and focus on capturing the upside of the market while hedging the downside.

Swan Group said the strategy has proved successful in the past, generating 9.3 percent average annual net returns to investors over its 16-year history, while logging only half the volatility of the S&P 500 Index.

Mr Swan founded Swan Wealth Advisors 16 years ago to focus on DRS investments and grew the firm to more than $1 billion in assets under management.

He will be joined on the Swan Group board by Bermuda reinsurance veterans Gregory Morrison, who will act as CEO, and Jonathan Dodd, who is chief financial officer.

Swan Group was advised by Taussig Capital and got capital advisory support from Middlebury Securities and is a participating reinsurer on the MultiStrat Re platform.

Taussig Capital’s Joe Taussig, who advised on the formation of Greenlight Capital Re, the Caymans-based firm run by hedge fund manager David Einhorn, and Third Point Re, said that Swan Group would follow the model laid out by Berkshire Hathaway, owned by Warren Buffett, dubbed the “Oracle of Omaha” due to his huge success in investment.

Mr Taussig added: “Greenlight Re has been in business for nearly ten years. During that time, Einhorn and Swan’s investment performance has been more or less the same, although Swan’s has been less volatile.

“As such, Swan Re can afford to leverage its balance sheet more than Greenlight has and it would not be unreasonable to expect that Swan’s first ten years to outperform Greenlight Re’s first ten years if Swan can hold form on his past performance.”

A Swan Re spokesman added: “Swan Re is the most recent of what is expected to be a number of select participating reinsurers that will be developed on the MultiStrat Re platform.”

Swan Re is based in offices in the Continental Building on Hamilton’s Church Street.