Tokenisation gains a foothold in Bermuda’s ILS market

The steady convergence of digital assets and traditional finance is starting to ripple through Bermuda’s reinsurance sector — and a homegrown ILS investment manager is helping to test the waters.

MembersCap, an independent Bermuda-based ILS manager licensed by the Bermuda Monetary Authority, is advancing  what its co-founder and CIO, Ben Fox (pictured), calls the “democratisation of reinsurance capital.” The idea is to open access to risk investment to new types of investors — digital currency holders.

Speaking exclusively to Bermuda:Re+ILS during Convergence 2025, taking place 13-15 October,  Fox said: “Institutional investors have long allocated to reinsurance for its diversification benefits. But the barriers to entry are high – you would usually need tens of millions. We’ve set our minimum at $50,000.”

That lower threshold is due in part to tokenisation — using blockchain infrastructure to enable investors to commit capital in the form of digital currency. “Qualified investors can invest using stablecoins — nothing more than a digital dollar,” Fox said. “They receive a token back representing their share in the fund. It’s the same model as any other ILS fund, just operating on digital rails.”

The potential significance for the reinsurance market lies less in the technology itself than in the type of capital it could attract. Digital currency investors — from high-net-worth individuals to family offices and emerging digital treasuries — represent a pool of wealth that has so far sat outside traditional reinsurance allocations.

Many manage portfolios heavily concentrated in cryptocurrencies and are now seeking uncorrelated, real-world assets to balance their exposure. By offering an on-chain route into reinsurance, structures like MembersCap’s could give this capital access to an established asset class while introducing a new demographic of investors to Bermuda’s alternative risk market. As the executive noted, “We believe there’s a great opportunity to source from a complementary set of capital that nobody else is accessing at the moment.”

This approach puts Bermuda at the intersection of two global trends: the growth of alternative capital in reinsurance, and the rapid institutionalisation of digital assets. While tokenised structures remain novel, the model has already attracted establishment attention. MembersCap recently became the first fund to execute a tokenised transaction on the London Stock Exchange Group’s new Digital Markets platform — a development that hints at how digital capital might one day flow into catastrophe risk.

To reassure a traditionally cautious market, MembersCap works through Hannover Re as its fronting partner, ensuring that cedants and brokers face familiar credit quality. “We knew the market would be sceptical,” Fox noted. “That partnership allows us to engage with the market in a language it understands.”

For now, the use of blockchain in reinsurance is still limited. Fox explained that: “We’ll be measuring this in years, not months. It’s like the cloud ten years ago — people said they’d never trust it. Now everything runs on it. Blockchain will get there too.”

In the meantime, Bermuda’s role as a regulated testbed gives the island a front-row seat to the next possible evolution of risk capital — where digital and traditional balance sheets may increasingly converge.

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