Saturday, 28 March 2015
Last updated 18 hours ago
Feb 20 2013 | 12:32pm ET
Reinsurance firms businesses have proven a popular way for hedge funds to raise permanent capital. They also can help hedge fund managers avoid paying U.S. taxes.
While the Internal Revenue Service penalizes companies who set up "passive foreign investment companies," it considers insurers to be active. And although it has said that insurers and reinsurers can't have a capital pool much greater than they need to back the insurance they sell, the IRS has never set thresholds, Bloomberg News reports.
Paulson & Co.'s PaCRE, for instance, sold reinsurance coverage amounting to just 1.6% of its initial $500 million in equity, $450 million of which came from Paulson executives. The average for a Bermuda-based reinsurer is 47%.
Other hedge fund-backed reinsurers, including those set up by SAC Capital Advisors and Third Point, aren't quite as penurious. The former has targeted sales equaling 30% of assets, and the latter 19%. Both also employ their own underwriters, while PaCRE outsources its underwriting, employs no one and uses another insurance's company's offices as its address.
Using a Bermudan reinsurer could save a hedge fund manager more than one-third in taxes, according to Bloomberg.
Mar 9 2015 | 6:35am ET
As more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…