Hildene Capital Management, LLC, a $12 billion credit focused alternative investment manager, has announced its entry into the life and annuity reinsurance space, with the formation of $1 billion reinsurer Ludlow Re.
Ludlow Re SPC, Ltd. (Ludlow Re) has been formed in the Cayman Islands as a Class B(iii) insurance company and is destined to have a life and annuity reinsurance focus.
Hildene said that Ludlow Re will offer reinsurance to global insurers and in an inaugural transaction, is set to reinsure approximately $1 billion of fixed index annuity reserves through a quota share reinsurance agreement between it and a U.S.-based life insurance carrier.
Hildene is the latest asset manager to enter the life and annuity reinsurance space, as managers continue to look favourably on the space as a route to secure access to additional long-term capital and deploy their investment prowess to a new cohort of third-party investors.
“Given its ability to provide long-term, flexible capital, Ludlow Re optimizes Hildene’s robust asset management capabilities, helping us as we seek to enhance returns for our investors,” explained Brett Jefferson, Founder and Co-Chief Investment Officer of Hildene.
“Since Hildene’s inception in 2008, we have taken a prudent approach to managing the size and scale of our assets and will continue to execute on this approach with Ludlow Re — opportunistically adding to our portfolio only when we believe we can confidently invest in assets that produce attractive returns for our clients.”
“Hildene’s structured credit assets, particularly TruPS CDOs, align well with the duration and liquidity profile of life and annuity insurance liabilities,” added Dushyant Mehra, Co-Chief Investment Officer of Hildene.
“We believe insurers and asset managers can benefit from a symbiotic relationship — money managers receive access to insurers’ expansive capital base while insurers receive access to sophisticated investment opportunities they may not have otherwise.”
Ludlow Re received a B(iii) insurance license from the Cayman Islands Monetary Authority in September 2022, the company explained.
Some asset managers are leveraging life and annuity reinsurance as a vehicle to raise additional assets as well, running sidecars funded by third-party investors alongside their traditional balance-sheet vehicles, to bring aligned capital into their underwriting and investment strategies.
We’re told Hildene’s initial plans are solely focused on the block and flow transaction segments of the life and annuities space, although it could expand its remit in future as it achieves scale.