Resource Re Ltd., the first reinsurer to join the Multi-Strat Re Ltd. Bermuda based reinsurance venture that seeks to enable asset managers, such as hedge fund managers, to enter the reinsurance market with less friction, is now actively raising capital.
Capital for Resource Re is being raised through its parent company Resource Holdings Ltd., according to a report on hedge fund website Opalesque. Both firms are Bermuda domiciled, having been registered in 2012, with Resource Re being a Class 3A insurer licensed by the Bermuda Monetary Authority.
Resource Holdings is offering shares to potential investors, who must be accredited, with a minimum offering size of $1m per subscription. The capital it raises will be used as underwriting capacity within the Multi-Strat Re model, with the premium float being returned to Resource Re and Resource Holdings to invest in a similar fashion to other hedge fund backed reinsurers.
The Multi-Strat Re model aims to make it much simpler for small to medium sized investors and asset managers to enter the reinsurance market, use their capital to underwrite business while generating profits by investing the premium or float within their investment strategies. The underwriting is centralised with Multi-Strat Re itself while the premiums will be shared between the participating reinsurers, of which Resource Re Ltd. is the first.
The asset manager behind Resource Re and Resource Holdings is Bill Lupien, a well known equity hedge fund investor, and his Kudu Partners LP fund. Kudu Partners, a hedge fund Lupien has managed since 2005, follows an investment strategy focused on opportunistic equity investments in mining stocks, according to Opalesque.
The Multi-Strat Re model, which allows investors like Lupien to benefit from the premium flows in reinsurance business while the Multi-Strat centralised underwriting model handles the allocation of capital to risk, could prove extremely popular with smaller hedge fund managers looking to emulate the likes of Greenlight Re. Participating in Multi-Strat Re could give Lupien access to different types of investors who may not have been able to access his normal hedge fund strategy.
Joe Taussig, CEO of Multi-Strat Holdings, Multi-Strat Re’s parent, commented; “I am thrilled to have Bill Lupien as our first sponsor. He hired me in my first civilian job when I graduated from the Harvard Business School and I was part of his team at Instinet. He is one of the three smartest people that I have ever worked with for more than a span of 10 years and I would trust him with my life.”
The future for Resource Holdings and Resource Re could include a listing as a way to encourage further capital into the vehicle and reinsurer. Taussig said; “We have spoken to several investment banks about listing Resource Holdings in Canada, the U.S., or the UK in 2014 and their initial reaction is very positive, provided that the capital markets are receptive and the company performs in the meantime.”
Resource Holdings offers investors a unique way to get involved in the investment strategy of Bill Lupien, while also benefitting from premium income of the reinsurance business sourced through Resource Re and Multi-Strat Re that its capital is allocated. That’s a very unique investment proposition in the financial market.
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