LONDON (Reuters) – Hedge fund Tangency Capital has raised a further $165 million to invest in the property reinsurance market, bringing its size to $265 million as the hurricane season gets under way, one of its co-founders told Reuters on Wednesday.
Insured losses from natural catastrophes totaled more than $200 billion in the past two years, leading to a rise in reinsurance premiums. Reinsurers help insurers share the burden of large losses such as hurricanes, in return for part of the premium.
Tangency Capital launched last year to invest directly in non-life reinsurance risks, and is benefiting from the rising rates, Dominik Hagedorn told Reuters by telephone.
“The market environment now is actually quite attractive, we are seeing meaningful rate improvement.”
Reinsurance rates rose by up to 25% in Florida, an area affected by hurricanes, in the latest renewal round, broker Willis Re said this week.
Investors have been attracted to funds that invest in catastrophe bonds and other insurance-linked securities as a way to gain exposure to the reinsurance market, which has higher returns than many asset classes.
Catastrophe bonds, for example, offer a high coupon but do not pay out if a particular natural catastrophe occurs.
Six insurance-linked hedge funds launched in 2018, though only one launched this year, according to data from Preqin. There were 227 hedge fund launches globally this year and 302 liquidations, Preqin said.
Tangency gained investments from pension funds and family offices in the latest funding round, Hagedorn said.
Tangency Capital has offices in London and Bermuda and was founded by Hagedorn, Michael Jedraszak and Kai Morgenstern.
Reporting by Carolyn Cohn; editing by David Evans