Third Point Re to wind down cat fund
Third Point Reinsurance Ltd is winding down its catastrophe reinsurance fund and diverting resources to Hiscox's Kiskadee insurance-linked securities (ILS) platform, in changes announced to the relationship between the two Bermuda firms.
Third Point Re, backed by Daniel Loeb's Third Point hedge fund, teamed up with fellow Bermuda-based re/insurer Hiscox two years ago to establish the catastrophe fund.
John Berger, the chief executive officer of Third Point Re, said in a statement that reinsurance market conditions and the desire to diversify were the drivers behind the changes announced.
“While our existing cat fund has delivered very attractive returns to investors since its inception in January 2012, we are mindful of the increasingly difficult conditions in the catastrophe reinsurance market in the near term and the increasing value of a broad underwriting platform,” Mr Berger said.
Catastrophe reinsurance rates have fallen due to below-average catastrophe claims in recent years and a surge of alternative capital pouring into the market in the form of ILS at the same time.
Third Point Re intends to make an investment in the Kiskadee funds and Manoj Gupta, lead portfolio manager for Third Point Reinsurance Investment Management Ltd, is expected to serve as an adviser to Kiskadee Investment Managers Ltd.
Mr Manoj will also continue to serve in various underwriting and corporate roles with Third Point Re. In addition, both parties intend to further develop their strategic relationship to include non-ILS business opportunities.
“For investors that seek to participate in the catastrophe reinsurance market, we believe Hiscox provides an outstanding franchise for sourcing risk around the globe,” Mr Berger added.
“We look forward to supporting Hiscox across both the Kiskadee ILS platform and non-catastrophe reinsurance opportunities in the future.”