AlphaCat portfolios to run off after surge in redemption requests – RenaissanceRe

AlphaCat portfolios to run off after surge in redemption requests – RenaissanceRe | Insurance Business Asia

Reinsurance

AlphaCat portfolios to run off after surge in redemption requests – RenaissanceRe

Reinsurer will shift its focus on own reinsurance and ILS fund strategies

Reinsurance

By
Kenneth Araullo

Bermuda-based RenaissanceRe has announced its plan to discontinue the portfolios of the AlphaCat Managers insurance-linked securities (ILS) fund strategies following a surge of redemption requests from investors.

This decision, highlighted in the company’s annual report, comes after RenaissanceRe’s acquisition of the Validus reinsurance operations from AIG, which included the AlphaCat Managers ILS investment unit.

The company’s decision to wind down the AlphaCat portfolios is aimed at reallocating resources and attention towards its core reinsurance and ILS fund strategies, with the goal of transitioning existing AlphaCat investors towards RenaissanceRe’s own ventures.

The AlphaCat Funds, focused on property catastrophe reinsurance and retrocession, reported assets and liabilities of $5 billion and $2.4 billion, respectively, by the end of 2023.

This shift arrives amid challenges, including the previously mentioned redemption requests that analysts suggest as a misalignment between AlphaCat’s investors and the fund’s future trajectory under RenaissanceRe’s management.

However, experts also explain that it presents new avenues for RenaissanceRe to streamline its investment strategy and foster stronger relationships with investors by integrating them into its existing reinsurance operations. RenaissanceRe retains an equity interest in the AlphaCat Funds and related entities valued at $4.4 million.

As per the reinsurer’s most recent financial reports, while gross premiums in the property section saw a dip of 7.4%, this was partially offset by an increase related to AlphaCat parent Validus. Net investment income also maintained a higher average in invested assets due to the acquisition.

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