RWA platform launches tokenized reinsurance fund

RWA platform launches tokenized reinsurance fund | Insurance Business New Zealand

Reinsurance

RWA platform launches tokenized reinsurance fund

Initial investments include a commitment of $15 million

Reinsurance

By
Kenneth Araullo

Re, a platform for real-world asset (RWA) reinsurance, announced the launch of its first open-ended reinsurance fund on the Avalanche (AVAX) network, marking a significant step in integrating blockchain technology into the reinsurance sector.

As per a CoinDesk report, initial investments in the fund include Nexus Mutual, a provider of crypto-based insurance alternatives, committing $15 million, and the RWA-focused Vista fund of Ava Labs, contributing a lesser amount.

Additionally, Re has successfully raised $7 million in venture capital during its most recent funding initiative, led by Electric Capital. This follows a $14 million seed funding round completed in late 2022.

Operating under regulation in the Cayman Islands, Re noted that it seeks to position itself as a decentralized counterpart to Lloyd’s of London.

With the global reinsurance industry handling nearly $1 trillion in premiums each year, its role in global commerce was highlighted by Karn Saroya, CEO of Re. He also emphasized the industry’s scale and significance.

“Reinsurance is the ocean, and insurance companies are the boats floating on the water,” he said.

Saroya further noted that leveraging blockchain could enhance settlement processes, increase operational efficiency, and ensure better transparency in capital reserves. This strategy aligns with the growing trend of tokenization, where entities including major financial institutions like BlackRock, Citi, and Franklin Templeton are creating digital versions of traditional investments to facilitate blockchain transactions for enhanced operational benefits.

Initially, Re’s fund will focus on backing low-volatility insurance areas such as property, trucking, aviation, and workers compensation, deliberately avoiding high-risk catastrophic exposures, according to Saroya.

The fund aims to deliver up to a 23% annualized yield to its investors and is open to US accredited investors and those abroad who pass Re’s know-your-customer (KYC) verification. The minimum commitment period for investments is set at one year, with the possibility of redemption as collateral is freed from the associated insurance firms.

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