Two Sigma Investments, a technology and data driven hedge fund and investments firm, is reported to be the front running candidate to buy hedge fund manager Steven A. Cohen’s firm SAC Capital’s stake in its year old reinsurer SAC Re.
SAC Re, which launched in July 2012 with $500m of capital and looked set to follow the typical hedge fund reinsurer model of underwriting low-volatility business while investing the premiums and income in the SAC Capital investment strategies, was reported to be up for sale recently.
SAC Capital and as a result SAC Re have suffered from insider trading charges levelled against SAC Capital. As a result the reinsurer has been seeking interest in a buyout for the SAC Capital stake, according to reports, with a number of hedge funds said to have expressed interest to date. SAC Re’s original capital injection came from SAC Capital itself, Capital Z Partners III, L.P. and other investors.
Now the Insurance Insider has reported that hedge fund and technology driven investment pioneers Two Sigma Investments are the leading candidate to acquire SAC Capital’s stake in SAC Re. According to its report, Two Sigma is in exclusive talks about the prospects of a deal and any buyout would likely see Two Sigma take on the role that SAC Capital provided by managing SAC Re’s investment portfolio.
If this deal was to come to fruition, it would see SAC Re continue to follow the typical hedge fund reinsurer model but with it investing the premiums and income (or float) in the hedge fund strategies of Two Sigma Investments. It will be interesting to see whether the reinsurer chooses to change its name after any deal is struck.
Intriguingly, the Insider also suggests that Brian Duperreault, formerly President and CEO at Marsh & McLennan and Chairman of ACE, is involved in the discussions. Could this deal see him come back to the sector leading a reinsurer, or perhaps he’s simply advising Two Sigma on a reinsurance acquisition?
We’ll update you should any more details on a possible deal come to light.
Update: A deal was announced in December, more here.