SKCG Group, the risk management and insurance advisor to some of the world’s largest hedge funds, has designed a program for hedge funds that includes a ‘Start-Up Kit’ for emerging managers. The program grows in sophistication as the fund’s assets under management and the number of employees increase. It is based on SKCG’s detailed analysis of the hedge fund industry’s insurance needs, from launch to their becoming multi-billion dollar asset funds.
“We created this program to give hedge fund managers a clear understanding of their options every step of the way,” commented David Parker, President of SKCG’s Employee Benefits Division. “When hedge fund managers launch their funds, they face abundant responsibilities and requirements. Our ‘Start-Up Kit’ is designed to take their risk management and insurance concerns off the table so they can concentrate on raising assets and managing their funds,” said Parker.
Some pre-launch concerns among hedge fund managers include purchasing property/casualty and liability insurance, workers’ compensation, medical coverage, as well other basics such as payroll administration. According to SKCG, more start-ups are also acquiring Directors and Officers and Errors and Omissions (D&O/E&O) Professional Liability coverage.
SKCG’s program then points more established hedge funds toward key person life insurance as an important component in the management of risk, alongside business succession planning and sophisticated pension and non-qualified deferred compensation programs. SKCG plays an important advisory role through each stage of growth, and provides hedge fund managers with “benchmark reports” showing the coverage and services that other hedge funds are buying. Especially in the current regulatory environment, making the right choices is more important than ever.
“Even at the beginning, providing the right coverage requires an experienced eye. The challenge is in being able to anticipate problems and respond quickly. If the hedge fund manager wants to sign a lease tomorrow, our analysis team needs to read every page of it today and comment accordingly,” said Mr. Parker.
SKCG developed its “Start-Up Kit” as the number of new hedge fund launches is increasing and industry assets under management recently hit $2 trillion – the level reached before the 2008 credit crisis.