Hedge funds muscle into reinsurance, attracting doubters

Reuters – Hedge funds are muscling their way into the market to share the cost of cleaning up after natural catastrophes, but skeptics are questioning whether they will stick around ahead of the next “big one” as underwriting returns fall.

Hedge funds have long been big buyers of insurance-linked securities such as catastrophe bonds, which pay high yields until a disaster hits and make up more than 10 percent of the $570 billion global reinsurance market.

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