Bermuda reinsurer evolves insurance finance
A platform for trading interests in insurance contracts is to launch, linking investors’ portfolios to the results of a Bermudian-based reinsurer.
Extraordinary Re said its secondary trading platform will enable asset managers and asset owners to build customised portfolios of insurance contract positions just like they would with stocks and bonds.
It said the platform opens the $20 trillion universe of insurance liabilities to direct contract-level participation by the capital markets.
A demonstration of the trading platform on April 29 is a significant next step in the evolution of insurance finance, it said.
"The new asset class of insurance contracts will be valuable to investors of all strategies," said Lee Van Slyke, CEO of Extraordinary Re.
“All portfolio management strategies may benefit, from value investing to technical analysis to buy-and-hold. Among the values to the investor is the non-correlation of insurance contracts with stocks and bonds."
The company said its patented technology is embedded in a proprietary user interface and a matching engine licensed from Nasdaq.
The system is integrated into a purpose-built Bermudian reinsurance company, Extraordinary Reinsurance Company Ltd, to allocate ERCL's underwriting profit and loss to the portfolios created by the trading participants.
In addition, each portfolio is allocated a part of the investment income of ERCL.
Mr Van Slyke added: "Rather than trapping capital in fully collateralised instruments, this patented plan allows long-term investors to earn investment income on premium dollars that have not been paid out in claims and expenses.
“Fans of Warren Buffett will appreciate this 'premium float'.”
Extraordinary Re will demonstrate the platform on April 29 at 11.30am AST.
The demonstration, by invitation only, is for asset managers and asset owners.
For an invitation, contact Joe Rosen at Joe.Rosen@XReHoldings.com or 1 347 647 0530.
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