Stone Ridge’s Longtail reinsurance platform continues to take shape

Stone Ridge Asset Management, the New York based mutual fund manager with a focus on alternative risk premia strategies including reinsurance and insurance-linked securities (ILS), continues to work on the establishment of its new Longtail reinsurance platform.

We first reported that Stone Ridge Asset Management had established Longtail Insurance Holdings Ltd. and a reinsurer Longtail Re Ltd. in Bermuda over a month ago, with the investment manager having begun the process of raising up to $500 million to capitalise the reinsurance platform.

We then also reported three weeks ago that Stone Ridge had also set up a fund vehicle in the Cayman Islands, to support its developing Longtail reinsurance platform ambitions, with the Longtail Fund I LP registered as an investment company for Stone Ridge and beginning a private placement offering of securities.

Another vehicle has been established in Bermuda by Stone Ridge Asset Management. Longtail Insurance Ltd. which we believe could be a yet to be registered underwriting company, perhaps the market facing vehicle of the platform (although we cannot confirm that at this time).

At the same time, the vehicle first registered as Longtail Re Ltd. has now been renamed to Longtail Underwriting Ltd. and registered as an Agent intermediary by the local regulator the Bermuda Monetary Authority (BMA).

It’s quite typical of third-party investor backed reinsurance platforms to have an agent or intermediary as part of the overall structure, particularly those backed by U.S. domiciled investors.

We’ve seen a number of these registered by investor backed initiatives over the years and they can also play an important role in local management of a reinsurance platform that is aiming to get a rating behind part of the structural set-up.

Not that we can confirm or deny whether Stone Ridge is in the process of setting up a rated reinsurance platform yet.

So under this developing Longtail reinsurance investments platform that Stone Ridge Asset Management is creating we now have, Longtail Insurance Holdings Ltd. (a holding entity), Longtail Insurance Ltd. (possibly an underwriting vehicle), Longtail Underwriting Ltd. (previously named Longtail Re Ltd. and an agent or intermediary), as well as the Cayman Islands based Longtail Fund I LP investment fund structure.

So the Longtail reinsurance investment management infrastructure continues to evolve, as Stone Ridge puts the pieces in place which we believe are designed to help it to access the market more efficiently and deliver enhanced returns to its investors, while also being more in control of its own origination.

We’ll keep you updated as things develop.