Insurance-linked securities (ILS), reinsurance and transportation investment manager, Hudson Structured Capital Management Ltd. has entered into a strategic relationship with reinsurer Everest Re that will see it invest across several Hudson funds as the pair co-operate on a number of fronts.
The pair have entered into a strategic agreement that they will collaborate on a number of fronts, including co-investment and in the launch of a new InsurTech focused investment fund that Hudson Structured will launch in early 2018.
Operating through its Bermuda insurance and reinsurance asset management business HSCM Bermuda Management Company, Hudson Structured will work with Everest Re on co-investment opportunities and transactions where the experience of the Hudson Structured team, along with its investor capital, can be combined with Everest Re’s global underwriting expertise, appetite for risk, strong balance sheet, and highly-rated reinsurance and insurance companies.
Interestingly, the agreement will see Everest Re investing across several of Hudson Structured investment funds, which suggests the reinsurance firm will allocate some capital into the managers ILS fund strategies.
Hudson Structured invests across the insurance return spectrum, allocating to a wide range of insurance and reinsurance related investment opportunities, from property catastrophe, to specialty lines, casualty risks, technology ventures and beyond.
As such the relationship between the pair will enable Hudson Structured to capitalise on the scale and reach of Everest Re, as well as its deep expertise, while Everest will benefit from Hudson’s expertise in identifying and structuring profitable re/insurance linked investment opportunities.
Of course Everest Re already has a strong position in collateralized property catastrophe markets through its Mt. Logan Re vehicle, but the investments it makes through Hudson Structured will provide a mechanism to leverage its underwriting expertise across other classes of re/insurance business, backed by and profiting from servicing alternative capital.
In particular, the pair are set to collaborate on Insurtech, with Hudson Structured set to launch a dedicated InsurTech investment fund this year, into which Everest Re will invest.
The two firms say they will collaborate to “identify and capitalize on trends and themes across the spectrum of InsurTech opportunities.”
“We look forward to working with HSCM to continue our efforts to drive innovation in the (re)insurance market,” commented Dominic J. Addesso, President and Chief Executive Officer of Everest Re Group, Ltd.
“We believe HSCM Bermuda’s unique skills will enhance our development of creative solutions and leverage the full strength of the Everest Re Group across the spectrum of reinsurance, insurance, and alternative capital,” Addesso said.
Michael Millette, Managing Partner of HSCM, added, “We are excited to be working with a leading global (re)insurance company with the breadth and depth of capabilities that Everest possesses.”
The combination of efficient third-party capital, InsurTech technology to mobilise that and match it with risk, alongside the investment and structuring expertise of Hudson Structured and the re/insurance reach and expertise of Everest Re could be compelling, for the companies and HSCM’s investors alike.
Hudson Structured often notes that it targets investments in sectors where players are shifting from balance-sheet financing to market financing, something that the combination of alternative capital and InsurTech promises to accelerate in reinsurance.
This shift has already been occurring thanks to the wave of innovation that ILS has driven through reinsurance, helping re/insurers to access market capacity which often proves more efficient than their own balance-sheets.
The way technology can adjust and shorten the value-chain, routing risk back to capital more efficiently while providing a better user experience, promises to accelerate this change, positioning this pair at the heart of that evolutionary change in risk transfer markets.
Vikas Singhal who heads-up HSCM Bermuda’s InsurTech investment strategy commented that, “InsurTech is evolving quickly and offers a strong pipeline of opportunities that will bring fundamental change to the (re)insurance experience. We expect that through our collaboration with Everest we will be able to improve the likelihood of success and returns for the companies in which we invest.”