BTG Pactual completes Lutece Re buy, to launch low volatility ILS strategy

Global markets and Latin America focused asset manager BTG Pactual Asset Management has completed its acquisition of Lutece Re Ltd., the Bermuda based reinsurance linked investments manager.

With the acquisition now closed, Lutece Re has been integrated into BTG Pactual Asset Management, the global asset management division of the company and the Lutece Re staff all join the firm as well.

Lutece was launched by Erik Manning, an experienced ILS structuring and broking specialist who had most recently been with Aon Benfield, alongside Angus Ayliffe, who was previously the Chief Financial Officer (CFO) at reinsurance firm Ariel Re in Bermuda.

The pair launched Lutece with a flagship retrocession investment strategy for 1/1 2018 and began the task of building out a team to support its expanding underwriting and investment management operations in Bermuda.

The relationship with BTG Pactual had already been cemented as well, as the Brazilian bank and global asset management firm had already backed Lutece Re with its own funds and those of third-parties when it launched at the start of this year.

Steve Jacobs, CEO of BTG Pactual Asset Management, commented on the acquisition, “We are pleased to have completed the acquisition of Lutece Re, adding experts and strategies focused on the reinsurance and retrocession segments where we see significant opportunity to seek returns uncorrelated to traditional credit markets and our existing revenue streams.”

Now part of BTG Pactual Asset Management, the firm said that an Investment Committee will oversee the Lutece Re ILS investment strategies.

Further expansion is ahead for Lutece Re as it looks to move beyond the traditional retrocession space into other ares of reinsurance, to create new opportunities for its investors.

Lutece already manages the Retro Opportunities strategy, which invests in higher yielding retro transactions, but it now intends to launch a low volatility ILS investment strategy in 2019 as well.

This new lower volatility ILS strategy will focus on what Lutece Re sees as a specific niche within the market of reinsurance opportunities, allocating capital at the regulatory level (both senior and super-senior tranches) of a reinsurer’s capital structure.

It’s going to be interesting to watch this develop, as BTG Pactual has access to investors that may not broadly allocate to the ILS space, and the experienced Lutece Re team now has a platform for growth that would have been harder to achieve on their own.