The third-party capital and reinsurance-linked fund management arm of Bermuda based reinsurer Montpelier Re, Blue Capital Management, has published a portfolio update on the progress made by its flagship listed catastrophe reinsurance and retrocessional linked investment fund, the Blue Capital Global Reinsurance Fund Limited.
With the mid-year June and July reinsurance renewals now behind us, Blue Capital can provide an update on the deployment of the remainder of the capital raised by the fund in December and the additional $52m raised in May. When we last covered the deployment of Blue Capital Global Reinsurance Fund’s capital back in January, the fund had raised just over $100m, 58% of which it had deployed.
Now, after participating in many renewal catastrophe reinsurance contracts Blue Capital has deployed $144.7m (of it’s approximately $152m in assets) through the Blue Water Master Fund Ltd., representing 97% of the net proceeds of its share issues so far. The funds manager, Blue Capital Management Ltd., said it was pleased with both the pricing and diversification it has achieved in the deployment of its capital assets.
William Pollett, President and CEO of Blue Capital, said; “The market reception to Blue Capital continues to be strong with brokers and cedants recognising the differentiated niche we occupy in the collateralized reinsurance marketplace. We are pleased to report that we have constructed a diversified portfolio with attractive risk-adjusted return characteristics, consistent with the investment objectives.”
The Blue Capital Global Reinsurance Fund targets a net return to investors of Libor +10% and aims to achieve it by investing in collateralized catastrophe reinsurance-linked contracts on a diversified basis. Through Blue Capital both retail and institutional investors can gain access to the return of the catastrophe reinsurance market through a vehicle with the backing of a major global reinsurer, Montpelier Re.
The Blue Capital Global Reinsurance Fund was recently recommended as ‘overweight’ in an analysis on the sector by JP Morgan Cazenove, with the analysts saying they appreciated its “relatively high risk/return objective and its backing by leading institutional reinsurer Montpelier Re, which has a clear underwriting process.”
Given the currently increasing interest in reinsurance-linked investments and the returns possible from catastrophe-linked securities, it will be interesting to see how the next fundraising rounds go for the listed reinsurance funds like Blue Capital. With the profile of te sector raising all the time, the listed fund vehicles are likely to see much greater demand going forwards.