Institutional hedge fund and equity investment managers have taken stakes in Bermuda-based reinsurer Third Point Reinsurance Ltd. The hedge-fund type reinsurer clearly resonates with large hedge funds such as Citadel and equity focused managers like Cambiar, both of which hold large stakes.
Citadel LLC, a large hedge fund owned by investor Ken Griffin, with around $17 billion of assets, owned 2.12 million shares at the end of September, valued at around $30.7 million. Citadel previously had its own catastrophe reinsurance-linked vehicles, such as CIG Re founded in 2004 and New Castle Re founded in 2005, and clearly continues to find the reinsurance strategy attractive.
Citadel sold CIG Re and New Castle Re back in 2009, as it exited the reinsurance sector, but it clearly finds Third Point Re’s strategy of underwriting classes of business largely outside property catastrophe reinsurance within its NYSE listed reinsurer a draw. Citadel also likely appreciates the chance to benefit from Third Point Re’s asset investment strategy, which is managed through hedge fund manager Dan Loeb’s Third Point LLC.
Cambiar Investments, an equity focused investment fund manager, held a larger stake at 2.39 million shares at the end of the third quarter, according to a Bloomberg report.
Third Point Re’s main largest investors include Kelso & Co. and Pine Brook Partners, while Dan Loeb himself holds just over 8%.
Third Point Re’s dual strategy of the listed reinsurer writing lines of business away from the property catastrophe reinsurance space, while its catastrophe fund focuses in on it, gives the reinsurer a balanced strategy with an offering that clearly proves attractive to large investors seeking stable returns.
As new strategies emerge and build track records in the reinsurance space, investors are clearly uncovering a new variety of choices to allocate capital to. Reinsurance-linked investing is becoming a varied asset class which can only help the space attract even greater amounts of capacity from external investors, through equity, fund and dedicated vehicles.
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