Steve Cohen’s SAC to Get into the Reinsurance Business

Steve Cohen “is branching out and plans to set up his own reinsurance firm,” according to Reuters Thursday.

Steve Cohen’s SAC Re is Expected to Launch Early Next Year

Steve Cohen’s new firm, which will be called SAC Re and based in Bermuda, is expected to launch early next year. Reuters reports Cohen “hopes to raise about $500 million in capital and that all the money would be invested in SAC funds.” For its operation, Cohen is entrusting the duty to insurance veteran Simon Burton. Burton comes to SAC Re with strong experience. He was “deputy chief executive of Lancashire Holdings, where he was also chief executive and chief underwriting officer of the group’s Bermudan underwriting subsidiary, Lancashire Insurance Co.”

Follow the Leader to Reinsurance

In making the move to offer reinsurance, Cohen the latest hedge fund manager to do so. Dan Loeb, who runs Third Point, said in September that he would be launching his own reinsurer. Third Point Re. David Einhorn, the manager of Greenlight Capital, has had his own reinsurance company, Greenlight Capital Re Ltd (GLRE), for several years. “Reinsurance essentially acts as a safety valve for insurance companies in that an insurer pays a reinsurer to cover part of its losses between certain thresholds.”  Reuters calls it “a savvy way to raise new money during tough times.”