RenRe to put AlphaCat Managers into run-off

AlphaCat Managers, one of the companies sold by AIG to RenaissanceRe as part of the $2.9 billion Validus Re sale last year, will be put into run-off. 

In a year-end Securities and Exchange filing, Bermuda-based RenRe said the third-party capital company will enter run-off after most of its investors had received full redemption prior to the close of the transaction in November.

RenRe acquired all of AIG’s treaty reinsurance business, including Validus Re and its subsidiaries, AlphaCat Managers and its managed funds, and all renewal rights to the assumed reinsurance treaty unit of Talbot.

The company said: “In connection with the Validus Acquisition, we acquired AlphaCat Managers, which manages third-party capital in various forms, including through closed-end and open-end Bermuda mutual funds and one managed account, collectively the ‘AlphaCat Funds’, which currently generate fee income.

“The AlphaCat Funds are primarily funded by third-party capital investors and controlled by external boards unaffiliated with us. The AlphaCat Funds are invested in various risk-linked instruments through variable funding notes issued by AlphaCat Re, AlphaCat Master Fund and OmegaCat Re, which give investors access to a range of property catastrophe risks.

“Prior to the Validus Acquisition, substantially all of the AlphaCat Funds had received full redemption requests from their investors and capital was being released accordingly, subject to certain constraints.

“We expect to run off this business over a period of time.”

RenRe had said it hoped to encourage Alpha Cat investors to put their money in RenRe’s third party capital units, which include rated balance sheet companies DaVinci and Fontana, Upsilon, which offers collateralised reinsurance and Medici which is focused on catastrophe bonds. 

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