Bermuda Expects More Hedge Fund Reinsurers

Nov 27 2013 | 10:59am ET

Hedge funds are set to launch more reinsurers in Bermuda in the wake of Third Point Re's successful initial public offering.

Hedge fund-backed reinsurers were the talk of last week's Ernst & Young Hedge Fund Symposium in Bermuda. The accounting firm's Jessel Mendes told the assembled that there was a "good feeling" about the industry's growth potential, while ILS Capital Management's Don Kramer said it was "very possible" that other hedge funds and asset managers would join Third Point, Paulson & Co. and SAC Capital Advisors in setting up reinsurance businesses.

Reinsurers serve as a kind of permanent capital for hedge funds, with the companies investing their premiums with their hedge-fund sponsor.

"In six months to a year, I expect to see another couple of asset managers starting up reinsurance companies, and there are a number of others in the pipeline," E&Y's Craig Redcliffe told The Royal Gazette.

"The big thing is that everyone understands the importance of the asset management industry to Bermuda and the ILS opportunities for Bermuda," Mendes added. "It's a joint effort involving the government, the regulator and the industry."

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