One of the insurance-linked securities (ILS) fund managers that achieved growth in advance of the all-important January reinsurance renewals was Tangency Capital, who secured investor inflows to lift its assets under management by 50% to around $400 million.
Tangency Capital Ltd. is an ILS investment management firm with a specific focus on investing in quota share reinsurance business.
Given the state of the global reinsurance market, particularly in retrocession and the lower availability of capital and product in that segment, it’s likely there were new opportunities for quota share reinsurance specialists such as Tangency Capital at the renewal, which the firm took advantage of.
Some reinsurers are looking increasingly favourably at quota share capacity as a more permanent source of capital, with the right partners.
The addition of newly raised funds from third-party investors takes Tangency Capital’s total ILS and reinsurance linked assets under management to roughly $400 million as of January 1st 2020.
That’s a 50% increase from the $265 million of ILS assets that Tangency Capital had at July 1st, impressive growth in just six months.
It’s also a 300% increase in ILS and reinsurance linked assets under management at Tangency in a year, as the investment manager entered 2019 with just $100 million to deploy.
Dominik Hagedorn, one of the co-founders of the company told us, “A growing number of institutional investors recognizes the value of a globally diversified portfolio as offered by quota shares.
“As an independent manager, we are able to build long-term partnerships with re/insurers that are fully aligned with our investors’ interests.”
As a result, Tangency Capital will have become a much larger player at this January renewal season, cementing itself as an important provider of quota share reinsurance capital to select partners.
Tangency Capital was launched at the end of 2017 by experienced reinsurance and ILS investment executives Dominik Hagedorn, previously at Deutsche Bank, Kai Morgenstern, formerly of RenaissanceRe and Michael Jedraszak who was most recently the Chief Investment Officer for ILS at re/insurer Hiscox.
The reinsurance focused investment manager underwrites quota share business on a fully collateralized basis.
Tangency Capital has been working to enhance the efficiency of its quota share offering as well, making changes to existing quota share deals as well as bilateral arrangements to deliver a more seamless renewal experience for ceding clients.
“As capital efficiency is on top of mind for both investors and re/insurers, we have been able to broadly roll out quota share structures that remove capital buffering at renewal, while offering cedents more stable, long-term cover,” Hagedorn explained.
The company’s goal is to provide an interface between high-quality institutional investors, such as pension funds, and reinsurance protection buyers who want to deal specifically with a specialist in quota share underwriting.