Montpelier Re’s reinsurance fund Blue Capital has topped $150 million of funds under management, buoyed by rising investor interest in the alternative space and its ability to leverage market insights and existing relationships enjoyed by Montpelier Re.
Bermuda:Re spoke with Bill Pollett, president and CEO of Blue Capital about the success of the fund, its attractions to a diverse investor base and how the team are looking to differentiate their offering in an increasingly active alternative market.
How have your capital raising efforts progressed since the launch of Blue Capital?
Demand has exceeded our expectations to date. In less than six months, our closed-ended fund, Blue Capital Global Reinsurance Fund, has raised approximately $152 million—$52 million from this latest fundraising and the rest raised during our IPO on the London Stock Exchange’s Specialist Fund Market in December 2012. We hope to take full advantage of our twelve month placing programme and, all else being equal, anticipate going back to the market in advance of the January renewal season. We are on target to grow this fund to more than $300 million over the next few years.
What kind of investors are seeking out Blue Capital and what is behind the strong level of interest?
We have attracted a broad range of new and existing high quality multi-asset institutional and wealth management investors who are struggling to deliver attractive returns using traditional asset classes. Our portfolio of select catastrophe reinsurance risks is largely uncorrelated to other asset classes and has an attractive return profile, so interest is continuing to grow and inquiries have come in from around the globe.
How is Blue Capital differentiating its offering in the alternative market?
Montpelier Re and Blue Capital manage almost $340 million of third party capital through the closed ended fund and six private sidecar arrangements. One of our biggest differentiators from other players in this space is that we can provide investors access to the entire catastrophe reinsurance market by leveraging Montpelier Re’s industry-leading proprietary systems, underwriting expertise, and deep broker and client relationships.
Do you expect to deploy the remainder of Blue Capital’s funds at the mid-year?=
We deployed $67 million of our initial capital during the January and April renewals. We plan to deploy the bulk of the remaining $85 million in the June and July reinsurance renewals.
How buoyant is insurer interest in alternative capital and how is Blue Capital tapping into this?
Blue Capital broadens the product mix that Montpelier Group is able to offer its brokers and longstanding clients. Our clients are typically smaller regional insurers who regard reinsurance as a permanent component of their capital structures. Many are now considering adding collateralized capacity into their reinsurance programmes to diversify their reinsurance panels but they want to do so with a long-term partner rather than trade with an unfamiliar capital market vehicle. They value our existing long-term relationship, they trust us and they know that we will pay claims on time and support them after the next big loss event.
Blue Capital, Montpelier Re, alternative capital, reinsurance, fund, Bermuda, ILS