Hedge fund reinsurer news

Financial market volatility has again hit the two most prominent hedge fund reinsurance firms, with both Greenlight Re and Third Point Re reporting another negative month on the investment side of their businesses in September.

Rating agency A.M. Best said yesterday that it remains committed to rating hedge fund reinsurance company start-ups and is focused on their credit fundamentals, after considerable market speculation in recent months.

Two of the largest hedge fund manager backed reinsurance companies have been hit by the volatility in financial markets during August, with both Greenlight Re and Third Point Re reported to have faced significant dips in return during the month.

Warren Buffett had previously bemoaned the fact that reinsurance had become a “fashionable asset class”. Now, his own business model is being blamed for creating further pressure on reinsurance prices, as new entrants look to operate with a reduced cost-of-capital.

Fully collateralized reinsurance company Oxbridge Re continues to build its income, both from its collateralized underwriting and its investment strategy. The reinsurer reported an increase in almost every metric for the second-quarter.

Insurance and reinsurance rating agency A.M. Best has withdrawn the ratings on the John Paulson and Validus backed joint venture investment-oriented (or hedge fund strategy) reinsurer PacRe Ltd., at the companies request.

Greenlight Re, a Cayman Islands domiciled hedge fund strategy reinsurance firm backed by David Einhorn’s Greenlight Capital, Inc., has again seen a quarterly loss due to its investment strategy, but the premiums written at the reinsurer continue to grow.

Watford Re, the hedge fund or investment-oriented, hybrid strategy reinsurance joint venture vehicle operated by Bermudian re/insurance group Arch Capital alongside asset manager Highbridge Principal Strategies, gained further scale in the second-quarter.

AlphaCat Managers Ltd., the ILS and third-party capital focused unit of Bermuda headquartered insurance and reinsurance group Validus, has passed the $2 billion mark for the first time, reporting $2.08 billion of assets under management.

The Association of Bermuda Insurers and Reinsurers (ABIR) has submitted comments in response to the U.S. Treasury Internal Revenue Service’s proposed rules targeting the perceived tax issue associated with hedge fund reinsurance strategies.