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About AlphaCat

Formed in 2008, AlphaCat Managers Ltd. is a Bermuda-based investment adviser for a series of insurance-linked securities funds and vehicles, which are capitalized by a panel of global institutional investors. AlphaCat is an SEC-registered investment adviser1, is registered as a “commodity pool operator” with the Commodity Futures Trading Commission (the “CFTC”) and is a member of the National Futures Association (NFA). AlphaCat also has independent portfolio management, valuation, reinsurance transaction origination and asset-management operations, in addition to integrated reinsurance transaction origination through Validus Services and risk modelling through Validus Research.

In addition to AlphaCat Managers, AlphaCat Capital Inc. was formed in 2014 and is the US / based marketing office. AlphaCat Capital is also registered with the SEC as an investment adviser.1

1Advisers Act registration does not and should not be read to imply a certain level of skill or training.

Investment Philosophy

Strengths of the Platform

  • AlphaCat focuses on a broad reinsurance universe, including traditional reinstateable reinsurance in addition to collateralized reinsurance and catastrophe bonds
  • Underwriters maintain an extensive contact network with the major brokers and global reinsurance purchasers

  • Validus Research employs over thirty dedicated scientists, catastrophe modelers and software developers to deliver the Validus View of Risk
  • All reinsurance submissions are reviewed and fully quantified to build a comprehensive view of the global reinsurance opportunity set

  • AlphaCat Managers is an SEC-registered investment adviser2

2Advisers Act registration does not and should not be read to imply a certain level of skill or training.

Frequently Asked Questions

Insurance Linked Securities (ILS) are financial instruments whose fundamental value is determined by insurance losses, caused by natural catastrophes such as major earthquakes and hurricanes. As the returns of ILS are primarily driven by natural catastrophes, when carefully structured, they are generally uncorrelated with the overall financial market, which can make ILS an attractive asset class for capital market investors.

Investors are often attracted to Insurance Linked Securities due to their low correlation with traditional capital markets assets.

Direct reinsurance is insurance for insurance companies and can be provided for any portfolio of business. The most traditional form is catastrophe insurance, whereby an insurance company buys protection from a reinsurance company, who issues a reinsurance contract which transfers the risk on an indemnity basis.

Retro(cession) cover in its simplest form is insurance for a reinsurance company, and protects them against losses arising from catastrophic events. Generally the cover is purchased by the reinsurance company from another reinsurance company, and is very similar to direct reinsurance for insurance companies. The cover is provided on an indemnity basis and transfers risk from one reinsurer to another. It is typically the most volatile market in terms of price movement and availability.

Catastrophe reinsurance is insurance for those insurance companies who have a portfolio of natural catastrophe business. Reinsuring these risks can help to manage earnings volatility and reduce the amount of capital needs to support exposures

Insurance Linked Securities (ILS) are financial instruments whose fundamental value is determined by insurance losses, caused by natural catastrophes such as major earthquakes and hurricanes. As the returns of ILS are primarily driven by natural catastrophes, when carefully structured, they are generally uncorrelated with the overall financial market, which can make ILS an attractive asset class for capital market investors.

Cat Bonds are privately offered insurance linked securities that transfer a specified set of risks from a sponsor to investors, Cat Bonds are generally not publicly traded, trading solely in over the counter markets. They emerged from a need by insurance companies to alleviate some of the risk they would face if a major catastrophe event occurred. In short, they are insurance for insurance and reinsurance companies, and are provided by issuing bonds on to investors. Most Cat Bonds are structured to offer insurers the benefit of fully collateralized reinsurance, which significantly mitigates the credit risk an issuer would normally accept from rated counterparties in the reinsurance market. They are generally categorized into 4 basic trigger types.

Cat Bonds are generally categorized into 4 basic trigger types:

  • Indemnity: triggered by the issuer's actual losses so the sponsor is indemnified, as if they had purchased traditional catastrophe reinsurance
  • Index to industry loss: triggered when the insurance industry loss from a certain peril reaches a specified threshold
  • Modeled Loss: triggered when there is a larger event and modelled losses are above a specified threshold
  • Parametric: triggered when there are natural events within the parameters set out by the contract. For example, a hurricane bond could be indexed to wind speed above an agreed level at a number of locations. Should wind speeds be recorded above this level at those locations, the bond is triggered
  • Parametric Index: triggered when a certain set of conditions are met (as above) but are linked to the losses the issuer may face as a result of the natural conditions

Industry Loss Warranties, or ILWs, are a type of reinsurance contract through which one party will purchase protection based on the total losses arising from a catastrophic event to the entire insurance industry rather than their own losses. The industry loss therefore triggers the pay-out. Industry insurance losses are calculated and reported by a thirty party index provider. The first contracts of this type were traded in 1980s.

Specific types of ILWs are:

  • Live Cat: contracts which are traded whilst an event is in progress
  • Dead Cat: contracts which are traded on an event that has already occurred by total industry losses are not yet known
  • Back-Up Covers: contract provide protection for events that occur following the catastrophe

Contact Us

     1 441 278 9000         investors@alphacat.bm

AlphaCat Capital Inc.

30 Hudson Street, 18th Floor, Jersey City 07302

AlphaCat Managers Ltd.

29 Richmond Road, Hamilton HM 08 Bermuda

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