Axis Capital will imminently unveil a new joint venture alongside alternative asset manager The Blackstone Group in what will be the latest so-called “hedge fund reinsurer” to enter the market, Reactions has learned.
Fund raising for the new venture will begin during the fourth quarter of this year and it is hoped to start underwriting ahead of the January 1, 2016 renewal.
There have been rumours that Axis was looking to enter the growing third party capital space as far back as March 2014 when Reactions’ sister title The Insurance Insider reported the Bermudian re/insurer was considering a possible joint venture.
And last November, The Insurance Insider revealed that Axis had paired up with Blackstone to commence work on launching a hedge fund reinsurer that would work along similar lines to Watford Re, the Arch Capital Group and Highbridge Principal Strategies joint venture that opened for business last year.
Sources close to Axis have now confirmed to Reactions that is indeed the case.
According to those sources, the as-yet-unnamed standalone company will offer solutions to insurance and reinsurance companies around the world that will combine the strengths of both Axis, which has some $7bn of capital, and Blackstone, which boasts approximately $330bn of assets under management.
According to the sources, the new venture will not compete directly with Axis for business, although it will write lines of business that the hybrid Bermudian re/insurer already offers.
“It’s always been in our interest to match the right capital with the right risk and there’s been a significant shift in the reinsurance world where the firms that can match the right capital with the right risk can have a significant advantage,” one source said.
“We wish to expand and, to some extent, extend our product offering to our clients with the creativity, service and continuity they have come to expect from us. It’s a great platform for product innovation.”
That Axis is making a move into the third party capital space is not a surprise considering its reinsurance arm, Axis Re, is headed up by Jay Nichols. During his time with RenaissanceRe Ventures, Nichols was one of the founders of the so-called third party capital space where he was responsible for the formation of DaVinci Reinsurance, Top Layer Reinsurance as well as sidecars and other similar ventures.
It is understood that Axis teamed up with Blackstone after lengthy conversations with several other interested parties. However, that the reinsurer has partnered with Blackstone is not a surprise as the asset manager was one of the lead investors in Axis when it first launched in November, 2001.
Even after Axis underwent an initial public offering in July 2003, the links between the company and Blackstone have remained strong with Robert Friedman, a senior advisor at the asset manager, sitting on the reinsurer’s board ever since it opened for business back in 2001.