Equity investment manager Hyaline Capital Management will soon be launching its own reinsurance firm, Hyaline Re Ltd., becoming the latest hedge fund style reinsurer to launch this year and a new addition to the Multi-Strat Re Ltd. platform.
Hyaline Capital Management is a New York based investment firm which operates a top-down, macro driven approach long/short equity hedge fund. Hyaline Capital’s hedge fund strategy utilises macro, fundamental and technical analysis to make investment decisions that it hopes are scalable and repeatable.
Hyaline Capital registered a Class 3A reinsurance vehicle in Bermuda on the 8th of January, Hyaline Re Ltd. and is preparing to join the ranks of the hedge fund backed reinsurers. This means it will operate a lower volatility underwriting strategy, backed with a non-traditional and typically higher performing investment strategy using its hedge fund to invest the premium assets, or float, generated by its reinsurer.
Hyaline Re will be the latest addition to the Multi-Strat Re platform, Artemis has learned. Multi-Strat Re Ltd. is a Bermuda based reinsurance venture that seeks to enable asset managers, such as hedge fund managers, to enter the reinsurance market with less friction.
Multi-Strat Re will enable Hyaline Capital to access reinsurance business through its pooled underwriting approach, dividing the premiums between the participating Multi-Strat asset managers who can then invest the float in their high-return investment strategies.
This strategy enables a hedge fund manager such as Hyaline Capital to generate a source of more permanent capital, from the underwriting premiums, to invest in its hedge fund investment strategy.
The reinsurance business providing premiums to Hyaline Capital will be sourced through the MultiStrat Re platform, a Bermuda special purpose insurer, through a quota share reinsurance agreement between Hyaline Re and Multi-Strat Re, alongside the other participating Multi-Strat strategy reinsurers.
So Hyaline Capital will be able to focus on the task of managing the premium float assets within its existing investment strategies to generate an outsize return, while Multi-Strat deals with the underwriting of reinsurance business to generate the premiums to be invested.
Hedge fund backed reinsurers look set to generate a lot of interest throughout 2014, with the Multi-Strat Re platform expecting to sign up new asset managers each month.
We’ll update you on Hyaline Re Ltd. when it is ready to launch.
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