AlphaCat funds see near-full redemption requests prior to RenRe acquisition

Even before RenaissanceRe had acquired Validus from AIG, the Bermuda based reinsurer has said that “substantially all” of the AlphaCat Managers insurance-linked fund strategies were subject to redemption requests from the third-party investors backing them.

In the latest annual report filing from RenaissanceRe, the company confirms that the AlphaCat ILS fund strategies will now go into a process of running off their portfolios.

As part of RenaissanceRe’s (RenRe’s) acquisition of the Validus reinsurance operations from AIG, the AlphaCat Managers ILS investment focused unit was part of the deal.

But, “Prior to the Validus Acquisition, substantially all of the AlphaCat Funds had received full redemption requests from their investors and capital was being released accordingly, subject to certain constraints” RenRe disclosed in its 10K filing.

Adding, “We expect to run off this business over a period of time.”

Clearly, third-party investors in the AlphaCat strategies were on the move prior to the coming together of RenRe with the Validus operation and AlphaCat Managers.

But, that’s not to say RenRe hasn’t converted any of the third-party investors behind AlphaCat structures into investors in its range of reinsurance joint-ventures and ILS fund strategies.

AlphaCat Funds are allocated to a range of risk-linked instruments focused on property catastrophe reinsurance and retrocession, through variable funding notes issued by vehicles AlphaCat Reinsurance Ltd. (AlphaCat Re), AlphaCat Master Fund Ltd. and OmegaCat Reinsurance Ltd. (OmegaCat Re), RenRe noted.

Thanks to the acquisition, RenRe now has a small equity holding in the AlphaCat Funds and AlphaCat Re that was valued at $4.4 million at December 31st 2023.

But, demonstrating the size of the run-off task and also the potential size of the opportunity for RenRe to covert investors to its strategies, the company disclosed that the total assets and liabilities of the AlphaCat Funds, AlphaCat Re and OmegaCat Re were $5 billion and $2.4 billion, respectively at December 31st 2023.

Which shows you the size that AlphaCat had reached, as well as the level of capital investors had committed to AlphaCat ILS fund strategies over the years, reflecting a broad group of institutional investors, no doubt some of which will want to stay in ILS and find a new home in RenRe’s funds and JV’s.

Previously, Chris Parry, Global Head of Capital Partners at RenaissanceRe, had told us in an interview that the company was working to bring AlphaCat investors into RenRe Capital Partners products.