Bermuda-based insurers Catlin Group Ltd. will lead the launch of a new product designed to cover investors in hedge funds against the risk of fraud by fund managers and staff.

Catlin, Great Lakes Reinsurance (UK) plc., part of the Munich Reinsurance Co. based in Munich, Germany, and other Lloyd's of London insurers have agreed to back the new product called Protean and made by Protean Investment Risks (PIR), a newly-formed company that offers specialist financial risk insurance products.

The product targets corporate and individual hedge fund investors based world-wide, said PIR in a statement.

PIR said the idea was thought up as a result of the experience of one major hedge fund investor who had been the victim of significant financial loss as a result of fraud at a hedge fund.