Hedge fund reinsurance model shows more promise
Friday, 11 11 2016, Category: Insurance and Reinsurance, Country: World
The hedge fund reinsurance business model showed its potential in the third-quarter of 2016 with both Greenlight Re and Third Point Re reporting net income gains compared with a loss in the same period last year, although there was still evidence of divergent performance across the two businesses.
The hedge fund backed, or investment orientated reinsurance business model looks to utilise profits from both the investment and underwriting side of the balance sheet, essentially drawing on one side of the business when the other becomes more challenging.
However, in the softening reinsurance landscape returns on the underwriting side of the balance sheet are increasingly difficult to come by, and with interest rates at dangerously low levels hedge fund reinsurers have found it just as difficult to benefit from the investment side.