Friday, August 5, 2016

Loeb, Einhorn Hedge Fund Reinsurers Benefit From Strong Investments in July

From Artemis:
The two highest-profile proponents of the hedge fund reinsurance strategy, Third Point Re and Greenlight Re, have both benefited from very strong July investment returns, with a considerable boost to the year being received at both firms.

By the mid-point of the year the two hedge fund backed reinsurers saw investment results diverge, as Greenlight Re which is backed by hedge fund manager David Einhorn fell to a -1% first-half investment loss, while Third Point Re, the Bermudian reinsurance firm backed by Daniel Loeb’s Third Point LLC hedge fund finished the first-half with a 2% investment return.

In July both of the hedge fund strategy reinsurers saw positive investment performance, boosting their year-to-date returns, But Einhorn’s Greenlight Re prospered the most, with a very impressive 4.8% July 2016 investment return.

That’s the best single months performance this year for Einhorn’s Greenlight Re, and has helped the reinsurance firm to reverse the negative performance and record a 3.9% return for the year at the end of July.

Meanwhile, Loeb’s Third Point Re also fared well, although not quite as impressive as Greenlight’s July. Third Point Re reported a 2.6% return in July, which tales the reinsurer to 4.6% for the year-to-date.
So now there is not so much to choose between the two main hedge fund reinsurance firms, as both benefit from market forces driving up their investment returns.

For Einhorn the positive investment performance in the first month of Q3 will help to make up some of the ground lost in the second-quarter of 2016, which saw relatively poor results announced as the reinsurer reported a negative investment performance for Q2, as well as an underwriting hit and costs related to exiting certain reinsurance business. Third Point Re will announce its earnings tomorrow....MORE