Hudson Structured Capital Management, the insurance, reinsurance and transportation linked investment firm set up by ex-Goldman Sachs structured products leader Michael Millette, has closed on and secured its $250m anchor investment from Blackstone, Artemis has learned.
Hudson Structured Capital Management launched in the second-half of 2015 as an investment management firm operating one fund offering insurance and reinsurance linked investments, and another fund offering transportation finance investments, with Millette a founding managing partner.
Since then Hudson Structured has been in the market with a private offering, seeking to raise launch funds for both of its fund. On the insurance linked investing side, the firm has now hired a team of experienced insurance-linked securities (ILS) and reinsurance executives to underwrite for and manage the re/insurance linked fund offering.
Part of the capital raise involved an anchor investment arrangement with one of the world’s leading investment groups, Blackstone, an asset manager with $336 billion under management at the end of 2015.
The anchor investment has now been secured, Artemis can reveal, as a source explained to us that Hudson Structured closed on the investment late last week.
We understand that this injection of capital from Blackstone is for around the expected $250m mark and will be allocated relatively equally across the Hudson Structured re/insurance and transportation investment funds.
The work now begins to deploy capital, we understand, and Hudson Structured is expected to target being fully invested as soon as it can. The timing works well for the firm’s insurance and reinsurance linked fund, with the key renewal period of June/July just around the corner.
Much of the insurance or reinsurance linked investments will be entered into via the firm’s Hudson Bermuda arm, with its underwriting committee located largely on the island. We’re told that the portfolio mix is set to be diverse, with property catastrophe likely to be a smaller proportion of the Hudson Structured fund than is typically seen in the ILS and insurance linked fund market.
In fact, we understand that lines of business including life, specialty risks (such as energy, marine, aviation etc), casualty risks and financial lines will all likely feature, as the fund becomes deployed, with catastrophe risks unlikely to be the largest business line Hudson Structured focuses on.
That will provide insurance linked investors with an interesting proposition, an ILS manager whose fund offers a true diversification to other managers in the ILS space, with the majority remaining largely property catastrophe focused.
We believe that Hudson Structured continues to seek to raise capital, with a private offering still open for institutional investors. Once the anchor capital is deployed the manager can begin to build a track record and with the backing of Blackstone, its funds are certain to attract attention.
Millette and his re/insurance investment team now have the task of navigating the current softened market, as they begin to deploy capital. However the broad focus of lines of insurance and reinsurance business invested in or underwritten should see Hudson Structured positioned in a space where it is not in direct competition with other ILS players all of the time.
By targeting areas of the market where ILS capital is not so prominent, Hudson Structured can likely access attractive returns while avoiding the most softened market areas, build a diverse portfolio and further spread the influence of the capital markets and third-party capital into insurance and reinsurance.