17 February 2014News

Hedge fund considers Bermuda reinsurer

Pine River Capital Management, the $14.3 billion hedge-fund firm, is reported to be looking to raise up to $750 million to capitalise a new Bermuda-based reinsurer called Pine River Re.

The start-up would be led by Bill Jewett, a former president of insurer Endurance Specialty Holdings, according to reports.

If the deal comes to pass, Pine River Capital would become the latest hedge fund to move into the reinsurance space in recent years. Its interest in the space was first indicated last year when it hired Albert Selius, an ILS expert who previously worked at Swiss Re and UBS. Pine River had also been cited as a potential buyer for SAC Re.

Pine River is evidently looking to emulate the success achieved by Greenlight Re in Cayman and more recently Third Point Re in Bermuda, which successfully IPO'd in 2013.

The new entity--should it come to fruition--joins a class of Bermuda players with hedge-fund focused strategies that have faced mixed fortunes since their formation. While Third Point Re has performed well, SAC Re was acquired to become Hamilton Insurance following well-documented troubles at its parent SAC Capital Advisors.

SAC Capital Advisors was obliged to divest of SAC Re following insider trading, with the company becoming newly-formed Hamilton Insurance, under the leadership of industry veteran, Brian Duperreault.

Any Pine River-backed entity will join Swan Re in 2014, the latest asset manager-backed reinsurer to call Bermuda home, with that particular entity backed by Swan Wealth Advisors.

US headge funds and asset managers evidently view a Bermuda reinsurance arm as complementary to their central asset management strategy, with their reinsurance divisions able to pursue a conservative underwriting strategy buoyed by market-leading investment returns.