19 May 2014News

Third Point Re limits funds due to softening cat rates

Third Point Re has said that deteriorating market conditions in the reinsurance market have prompted it to limit the size of its catastrophe investment fund.

Third Point Re operates the Third Point reinsurance opportunities fund, which invests predominantly in catastrophe reinsurance linked investments.

As of the end of the first quarter, the fund’s size stood at $106.7 million. It has now said it will limit new investments in the fund to protect the returns of its existing investors.

This is not an atypical occurrence in a difficult market environment. By limiting new investor access to the fund Third Point Re can prevent any dilution of the catastrophe funds returns.

John Berger, CEO of Third Point Re, made the comments in the firm’s recent earnings call. “Our cat fund continues to be a strategic component of our total return model, but due to rapidly deteriorating catastrophe market conditions in this segment we will limit the size of the fund to ensure we target appropriate returns for our investors.” he said.