Horseshoe launches hedge fund reinsurance platform

Bermuda-headquartered insurance-linked securities (ILS) management, servicing, transformation and fronting specialists Horseshoe Group, has launched a new platform which targets asset managers seeking to establish hedge fund investment oriented reinsurers more simply.

Horseshoe has established a new wholly owned subsidiary named Convergence Risk Services (CRS), which will provide turnkey services to asset managers seeking to enter the reinsurance sector to underwrite longer-tailed risks while actively managing the assets.

Convergence Risk Services will target asset managers and hedge fund managers who want to benefit from the more permanent capital that can be accessed by underwriting reinsurance business while putting the premium float assets to work within their own investment strategies.

CRS will focus on underwriting casualty reinsurance risks for the asset or hedge fund managers that join the platform. Horseshoe announced today that it has hired experienced casualty reinsurance underwriter Steven Musicant as Chief Underwriting Officer of CRS. Musicant was previously an SVP at Maiden Reinsurance Ltd. where he underwrote U.S. and international working layer and first excess layer casualty treaty reinsurance.

Horseshoe Chief Operating Officer Brenton Slade has taken on the role of CEO of CRS.

CRS will utilise the services and facilities of the Horseshoe Group to provide full management of the reinsurance companies it establishes for asset managers that join the platform. It aims to offer a cost-effective way for asset managers, such as hedge funds, to enter the reinsurance sector without significant startup costs and initial capital layout.

“We are extremely excited about the formation of CRS and our ability to leverage our existing infrastructure to provide full-service solutions in the formation of these type of reinsurers” commented Andre Perez, CEO of Horseshoe Group.

“We believe there will be a significant demand from small and medium sized asset managers to form cost effective reinsurers to enter the casualty market. Taking a page out of the ILS market book, the reinsurers on the CRS platform will fully collateralize their obligations which will make them top reinsurance security without the need of an agency rating,” he continued.

“CRS will effectively act as a launchpad for this type of reinsurer,” added Slade “by providing a cost effective solution to start operations without committing to significant costs until the business ramps up. CRS is unique in its ability to provide market facing underwriting services to clients on our platform and Steve Musicant has an excellent underwriting track record. We view this as the next generation in casualty underwriting and a new chapter in convergence products expanding outside of the property catastrophe markets.”

CRS has already signed up its first asset manager sponsored reinsurer, which will combined CRS’ casualty reinsurance underwriting expertise with an actively managed investment portfolio.

There has been an expectation for some time that asset managers and hedge fund managers would increasingly seek to emulate the hedge fund Re model in order to access more permanent sources of capital from the underwriting premium float assets.

CRS is not the first to seek to make entry into reinsurance easier for asset managers, it takes a similar strategy to the also Bermuda-based MultiStrat Re Ltd. platform.