Resource Re Ltd., the first hedge fund style reinsurance firm to join the Multi-Strat Re Ltd. platform last September, is changing hands as the reinsurer and its holding company Resource Holdings Ltd. gets acquired by Americas Bullion Royalty Corp.
Americas Bullion Royalty Corp. is a firm which invests in what it believes to be undervalued natural resource assets and seeks to provide superior investment returns to its shareholders. On January 6th the firm announced its intention to acquire the securities portfolio of Kudu Partners, L.P., the hedge fund managed by investor Bill Lupien and the asset manager behind Resource Re.
The acquisition is part of a re-organisation by Americas Bullion Royalty Corp., which will see it expand its organisational focus to create a unique corporate entity that combines royalties, equity holdings, reinsurance and innovative investment strategies.
The idea is to create a unique, diversified investment company which will aim to have superior access to capital and markets than others in the resource sector. The addition of a reinsurer to the fold will allow it to capitalise on, and continue to invest, the premium float generated by Resource Re’s reinsurance business.
Under the agreement Resource Holdings will change its name to Till Capital Ltd. and an application has been made to list its shares on the Toronto Stock Exchange Venture Exchange. The parties hope to get approval for this listing by late March.
The re-org will see the new entity change its business to primarily reinsurance with additional key investments in royalties and equities within the resource sector. Americas Bullion Royalty Corp. clearly saw the reinsurance opportunity as attractive and by bringing an asset manager, Bill Lupien, onboard along with his portfolio it sets them up to gain access to long-term capital, premium income and very robust investment strategies to boost returns.
The organisation will be consolidated under Resource Holdings, soon Till Capital Ltd., with all of the issued and outstanding shares in Resource Re Ltd. moving to the new corporate entity along with the Class 3A Bermuda insurance license. Bill Lupien will continue to manage the assets and securities from the Kudu Partners portfolio and for the reinsurer Resource Re.
Resource Re Ltd. will continue to underwrite low-volatility, conservative reinsurance business, allowing the new owners to benefit from a stream of income which can be put to work in its various investment strategies due to the time delay between premiums coming in and claims being paid out.
The reinsurer will continue to be part of the Multi-Strat Re Ltd. platform, which allows it to gain access to reinsurance business as part of a pool of reinsurers, lowering the frictional costs to start-up in the reinsurance business. It will still benefit from the premium flows, taking a quota share of the business written at Multi-Strat Re, along with other participating reinsurers.
It’s a fascinating development for the first reinsurer from the Multi-Strat Re platform. To be acquired so quickly and now be applying to list on a stock exchange shows just how attractive the hedge fund or asset manager backed reinsurance model is.
This could result in other diversified corporations, which have investments as one part of their business, looking more seriously at the reinsurance business as a source of stable and more permanent capital inflows.
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