Tangency Capital Ltd., an insurance-linked securities (ILS) investment management firm focusing on quota share reinsurance business, has added a new $165 million capital raise in time for the mid-year renewals.
The addition of the freshly raised $165 million of investor funds takes Tangency Capital’s total ILS and reinsurance linked assets under management to $265 million.
Dominik Hagedorn, one of the co-founders of the firm, told us that the addition of almost $165 million of capital was in time for the summer renewal season.
Tangency Capital had around $100 million under management at the beginning of 2019. So the additional capital raise for the mid-year reinsurance renewals represents a more than doubling of its asset base.
The company seeks to provide an interface between high-quality institutional investors, such as pension funds, and reinsurance protection buyers who want to deal specifically with quota share underwriting specialists.
Commenting on the firm’s strategy, Hagedorn explained, “End investors continue to value the co-investment approach, aligning themselves with the most attractive reinsurers globally.
“Many pension funds that want to allocate to sidecars are confronted with challenges of detailed due diligence and investment format, requiring a fiduciary to access those types of investments. Tangency offers low-cost access to quota shares while solving those issues for its investors.”
Tangency Capital was launched at the end of 2017 by experienced ILS investment and reinsurance convergence 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 ILS manager underwrites quota share business both on a fully collateralized basis and through a fronting agent on a rated basis.
Tangency Capital expects demand for its products to persist on both sides, as the alignment model intermediated by an independent manager holds promise for each.
“The demand for quota share capacity by cedents continues to grow, as re/insurers look for long-term partnerships with institutional investors,” Hagedorn said.
Tangency’s new capital raise came from commitments made be institutional investors including pension funds and family offices.