Merion Square Capital LLC has been launched today as a new insurance-linked securities (ILS) fund manager with $150 million of initial capital commitments, by ILS and collateralized reinsurance specialists Rewire Holdings LLC alongside alternative investment manager Vida Capital Inc.
The joint-venture ILS asset manager Merion Square Capital has launched with an open-ended fund structure set to invest primarily in ILS and reinsurance linked securities, to include an emphasis on property and casualty insurance risks, annuities and also mortality linked contracts.
Merion Square Capital brings together the reinsurance and insurance-linked securities experience of Rewire Holdings, along with Vida Capital’s expertise as a dedicated institutional asset manager of alternative insurance related assets.
Merion Square Capital will be led and managed by managing principals of Rewire, Stefano Sola, Richard Pennay and Markus Schmutz, acting as the firm’s investment team.
Launching with an initial $150 million of capital through this open-ended hedge fund structure, Merion Square is expected to continue to raise new capital throughout 2019 as it targets expansion and growth.
The Vida Capital team will take on the fundraising, investor relations, finance, compliance and other operational-related functions of the new ILS investment manager.
Stefano Sola, CEO of Merion Square, commented on the launch, “The Rewire Securities team looks forward to partnering with Vida Capital in establishing a new asset management company. The ILS market is currently at a critical point in its maturation, and Merion Square will utilize our collective experience to best serve our investors and industry stakeholders as principal investors.”
William Tice, Senior Managing Director of Vida Capital, added, “We look forward to partnering with the Rewire team and combining our expertise into a best-in-class asset manager. Since Vida’s inception, we’ve been committed to generating compelling returns for our investors in the longevity space. We look forward to our new partnership to not only broaden but complement our existing product offerings.”
The Rewire team has significant ILS and reinsurance market experience, having originated, structured and placed over $2 billion of insurance-linked securities since launching the boutique firm.
Rewire Securities LLC, the independent U.S. broker-dealer arm focused on ILS, will now stop originating and distributing ILS transactions on an agency basis so it can now become a dedicated vehicle to Merion Square for fundraising and structuring investment opportunities for the management vehicle.
That will give Merion Square a useful ability to originate and structure transactions for its own end-investors, very useful as origination and accessing risk more directly becomes increasingly important in ILS markets.
The Merion Square investment team of Sola, Pennay and Schmutz have collectively worked on more than $25 billion of ILS issuances since the late 1990’s, giving them significant expertise and contacts in the space.
Vida Capital, meanwhile, has a history of specialising in insurance-linked strategies with a predominant focus on longevity-contingent risk, something Artemis covered back in July this year when the firm announced a capital raise for a longevity focused life settlements investment strategy.
Vida Capital has around $3.6 billion of assets under its management and is said to have recognised a unique opportunity to partner with Rewire and build a diversifying non-correlated platform focused on insurance-linked securities (ILS) in other classes of risk and peril.
Given the challenging few months experienced by the ILS market lately, it is encouraging to see that the sector shows no signs of slowing down, as new launches begin to emerge once again.