Hedge fund linked reinsurer Third Point Re launches in Bermuda

Another reinsurance company has been formed which has strong links to a hedge fund. In what is becoming quite a trend, Third Point Re has launched in Bermuda as a way to raise additional capital for New York based hedge fund Third Point LLC, according to Bloomberg.

Third Point Re will initially be capitalised with $500m, some of which has come from Third Point founder Daniel Loeb and will seek to raise further capital from investors. Eventually they plan to sell shares to further capitalise themselves, according to the Bloomberg article.

The reinsurance market is seeing increasing interest from investors such as hedge funds looking to start-up a vehicle at a time when reinsurance rates are widely expected to start rising (soon). Industry experts say that all it would take is one more major loss and reinsurance rates should begin to climb across many lines of business making this an opportune time to enter the sector.

We’re not sure what lines of business Third Point Re will involve themselves in but there’s a good chance that they will follow the trend for writing retrocessional covers or perhaps ILW’s, as many newly established reinsurance vehicles do.

Third Point Re certainly won’t be the last reinsurance vehicle to launch in the current market conditions. There is talk in the market of other start-ups launching in the near future.