1 month ago
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Greenlight Capital Re Ltd. (Greenlight Re), the reinsurance firm headquartered in the Cayman Islands and affiliated with investment manager David Einhorn, is working to develop third-party capital partners and exploring opportunities to work with ILS investors.
At an investor day held this week, the reinsurance company presented on its progress and a range of strategic initiatives it is pursuing.
Greenlight Re has clearly recognised the opportunity that third-party capital and the appetite of investors for insurance-linked securities (ILS) presents at this time, with these deserving of a mention.
The company explained that its progress over the last two years has stabilised its performance, with a combined ratio below 100 driving eight consecutive quarters of underwriting profit and further improvements expected over time.
At the same time, the reinsurance company sees opportunities to expand and, within its innovations underwriting division, an opportunity to partner with capital providers to help in scaling up and also to earn fee income.
With the reinsurance market environment still attractive, demand for solutions rising and new entrants and capital still not entering the sector in any volume at this time, Greenlight Re sees an opportunity to grow its business while continuing its focus, with property and specialty seen as particularly positive areas.
One area of potential expansion is the fact Greenlight Re is working to develop third-party capital partners.
The company explained that raising equity capital at this time is unattractive, but it believes it can access third-party capital “at book” to leverage its capabilities and generate fee or spread income.
Greenlight Re further highlighted that it spends approximately $10.6 million on outwards excess-of-loss reinsurance, which has risen from $6.2 million spent a year earlier.
As a result, the company said it is “Investigating ILS investor opportunities.”
The company has also put in place a whole account quote share partnership program to support its “profitable and growing Innovations book.” Greenlight Re saw stronger interest than expected for the 20% quota share arrangement and clearly sees this as another area that third-party capital could support its business.
Interestingly, Greenlight Re has established a captive platform under Viridis Re SPC in the Cayman Islands, which it intends to offer as a kind of turn-key captive platform, providing cost-effective insurance and reinsurance solutions to current and future insurtechs and MGA partners through its segregated accounts.
Could Viridis Re potentially become a vehicle through which Greenlight Re could involve third-party capital and ILS investors, to support its reinsurance capital deployment to partners?
It seems possible and with the reinsurer having a differentiated investment strategy, through the close affiliation with David Einhorn and his DME Advisors, it’s interesting to think how this could also be applied, especially in lines of business with longer-tails than the typical property cat risks we see in ILS.
English (US) ·