Bermuda-based hedge fund strategy reinsurer Third Point Re has begun the process of closing its catastrophe investment fund, part of which involves investing in Hiscox’s Kiskadee ILS platform, with the first $5m having been invested on January 2nd.
Back in December reinsurance firm Third Point Re announced that it would be closing its insurance-linked securities (ILS) fund, the Third Point Reinsurance Opportunities Fund Ltd., while folding some of its catastrophe investment management resources and making an investment into Hiscox’s Kiskadee Investment Managers.
The Third Point Re cat fund had been launched in partnership with Hiscox, Hiscox had actually seeded the Third Point Re catastrophe fund at the beginning, so the continuation of this partnership is a natural progression of that. Closing and winding-down the cat fund will allow Third Point Re to focus on its core reinsurance operations, while moving the catastrophe fund resources over to Hiscox’s Kiskadee.
On the 5th January a shareholders agreement between Third Point Reinsurance Ltd., Hiscox Insurance Company (Bermuda) Limited (“Hiscox”), and Third Point Reinsurance Investment Management Ltd., was terminated. The termination of the agreement will allow for the redemption of Hiscox’s shares in the catastrophe fund by Third Point Re, thus beginning the wind-down of activities.
This agreement is signed in connection with the expected redemption of all of the outstanding investments in the Third Point Re cat fund, as part of the discontinuation of the reinsurers catastrophe investment management activities and winding down of the fund.
Third Point Reinsurance Investment Management Ltd., the catastrophe fund manager, will continue to manage the fund’s business while it is in run-off, but there will be no new business written by the cat fund and no new investments in it accepted.
Third Point Re said in December that it intended to invest $25m into insurance and reinsurance group Hiscox’s separately managed insurance-linked securities platform, Kiskadee Re Ltd. The first investment has now been made, with $5m invested on the 2nd January. The remaining $20m is expected to be invested on the 1st June, coinciding with the U.S. catastrophe reinsurance renewals.
The closure and shift of resources and some capital to Kiskadee makes sense for Third Point Re, allowing it to focus on its reinsurer strategy instead of the catastrophe management business where it had not achieved much scale. Hiscox’s Kiskadee ILS platform will benefit as a result, from some additional capital, a continuation of the partnership with Third Point Re and also from some of the resources that will be available to it.