Stone Ridge Reinsurance ILS funds re-open to investors


Just last week we wrote about New York based investment manager Stone Ridge Asset Management‘s successful raising of initial capital targets for its two insurance-linked securities (ILS) and reinsurance-linked investment funds. U.S. Securities and Exchange Commission documents showed that the funds had raised around $350m and subsequently had been closed to new investors. It transpires that both of the Stone Ridge Reinsurance funds were re-opened for business on the 21st March.

The two funds, called the Stone Ridge Reinsurance Risk Premium Fund and Stone Ridge High Yield Reinsurance Risk Premium Fund, both target the returns of the catastrophe reinsurance market for investors. According to financial statements made available by the SEC, both hit their targets for initial assets after fundraising with the Stone Ridge Reinsurance Risk Premium Fund raising around $250m and the Stone Ridge High Yield Reinsurance Risk Premium Fund raising around $100m.

Stone Ridge chose to shutter the funds to new investors on the 6th February, a common practice that investment managers follow which is often related to deal-flow in the market. Investment managers don’t want to take on additional investment capital if they are going to find it difficult to put it to work and indeed many funds have restrictions on how much cash they can hold.

According to a document filed with the SEC on the 21st March, both the Stone Ridge Reinsurance Risk Premium Fund and Stone Ridge High Yield Reinsurance Risk Premium Fund were reopened to all investors as of that date.

This could be a reaction to the increased deal-flow in the catastrophe bond market, Stone Ridge may have seen this as an opportunity to deploy more capacity if it could be raised. Or it may simply be a case of the investment manager taking advantage of continuing strong interest from investors.

Opening and closing of funds can happen at anytime, however we felt this occurrence was worth mentioning in light of our article last week on Stone Ridge Asset Management.

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