Cartesian and Aspen to part ways on reinsurance asset management

Cartesian Re, a New York and Bermuda based reinsurance-linked asset management firm formerly known as Cartesian Iris, is to part ways with its ILS venture partner, Aspen Insurance Holdings. Cartesian Re will continue its industry-loss warranty (ILW) focused asset management strategy while Aspen will focus on its own capital markets unit.

Cartesian Re was formed by the private equity firm Cartesian Capital Group LLC as its first venture in the ILS and reinsurance-linked investment market back in 2009. The firm formed a reinsurer, Iris Re, and also launched an ILS investment fund and fund manager, Cartesian Iris, into which Aspen Insurance Holdings invested $25m.

As well as being a seed investor in Cartesian Iris, insurance and reinsurance group Aspen assisted the Cartesian ILS fund with advice on risk selection, pricing and portfolio design. Now, four years on, Aspen has recently launched its own ILS focused division, Aspen Capital Markets and as a result will pull out of the Cartesian venture to focus on this internal unit.

The Cartesian Re asset manager, ILS fund and Bermuda Class 3 reinsurer Iris Re will continue to operate as before under the watch of its management team and the Cartesian Capital Group. The focus at Cartesian Re will continue to be primarily on investment opportunities in industry-loss warranties (ILWs), its open-ended fund structure Cartesian Re Offshore Fund, L.P., some opportunistic short-term structures and managed accounts for some of its investors.

Managing Partner of Cartesian Capital Group, LLC, Peter M. Yu, told us; “When we founded Cartesian Re (nee Cartesian Iris) in 2009, my goal was to provide our investors with superior and uncorrelated risk-adjusted returns through a highly disciplined practice focused exclusively on ILWs. We have enjoyed solid success, generating 49 consecutive months of positive underwriting returns.”

Mr. Yu explained that Cartesian Re has also been busy expanding its team and business during 2013 with the addition of two experienced professionals who have taken senior roles at the firm.

Joseph Hissong joined Cartesian Re as President from his most recent role building and managing PartnerRe’s private equity business. Wit almost 25 years experience in insurance and reinsurance Hissong has a strong background across reinsurance and investing. Previous roles saw him serve as a Managing Director in Swiss Re’s Financial Services Business Group, where he was responsible for a wide range of insurance and investment products. Before that Hissong was a partner at law firm LeBoeuf Lamb Greene and MacRae.

Cédric Drui joined Cartesian Re as Vice President from Transatlantic Re where he worked in the Global Cat Portfolio Management team managing third-party capital through reinsurance sidecars. Drui previously worked as a Senior Consultant at Risk Management Solutions, where he assisted on the risk analysis on a number of insurance-linked securities and catastrophe bond deals.

Mr. Yu commented on the additions to the Cartesian Re team; “They are tremendous colleagues and great additions to the team, joining our Lead Portfolio Manager, Peter DiFiore.”

As we wrote just over a week ago in this article on the progress being made in Aspen’s new capital markets and ILS division, Sal Tucci who worked at Cartesian Iris for a time, moved across to work as the Director of Capital Markets at Aspen Re earlier this year.

Mr. Yu stated; “Our friend Sal Tucci, who had been seconded to Cartesian from Aspen Re last year, will transition his role in early 2014 and assume a new senior position at Aspen. We congratulate Sal on that appointment; he has been and will remain a good friend of the firm.”

So the two firms, Cartesian Re and the Aspen Capital Markets division, will now follow their own strategies in ILS and reinsurance-linked investments. The ILW focused Cartesian Re continues to offer investors a focused opportunity with a four-year track record while the Aspen Capital Markets team will likely offer a broader range of strategies but only now begins to build its track record. The time that Aspen spent engaged with Cartesian Re will certainly help it achieve its aims in ILS and will likely help it accelerate its progress thanks to the experience gained in the joint venture.