Third Point launches life & annuity reinsurer Malibu Life Re

New York based alternative asset manager Third Point LLC has announced the launch of Malibu Life Reinsurance SPC (Malibu Life Re), a newly licensed life and annuity reinsurer based in the Cayman Islands.

Malibu Life Re is an independent, Class B(iii) Cayman Islands-based reinsurer wholly owned by Third Point LLC and its affiliates, launched to pursue reinsurance relationships with major life and annuity providers.

Third Point is, of course, well-known in the reinsurance space, with the Daniel Loeb having established Third Point Re in 2011, which was one of the first reinsurers to adopt a hedge fund investment-like total-return strategy.

Third Point Re merged with Sirius and became what we now know as SiriusPoint. Third Point continues to manage assets on behalf of SiriusPoint today.

With this launch of Malibu Life Re, Third Point LLC is targeting the life and annuity reinsurance space instead of P&C, a sector increasingly popular with asset managers given the large portfolios of assets that are generated.

It’s also not a hedge fund, or total return strategy reinsurer.

We understand the motivation is to stand-up a brand new reinsurer, Malibu Life Re, in a sector that can be very profitable, life and annuity risk, while also participating in the asset management for the vehicle. But that asset management is not hedge fund focused, it is far more typical of a life and annuity reinsurance play, with a focus on credit opportunities.

The Malibu Life Re strategy will be focused on providing asset-intensive reinsurance solutions, in the life and annuity space.

To begin, the reinsurer has already entered into a treaty with a leading U.S. annuity provider, that sees Malibu Life Re providing quota share reinsurance across $3 billion of annuity products.

We understand that book is expected to deliver accretive profits from day one and we’re told that additional counterparts are expected to be sourced over time, so this is not a one-time deal, but more of a multi-transaction life and annuity sidecar approach, with the ability to face the market as well.

The company explained, “Malibu Life Re intends to scale through select partnerships with insurers providing flow and/or block reinsurance.”

Third Point LLC is set to provide investment management and strategic services to Malibu Life Re.

On the investment management side, this will leverage Third Point’s ability to source excess spread in the credit asset class space, as well as its portfolio management capabilities. So, far from the hedge fund strategies the manager was known for with Third Point Re.

Third Point is not the only asset manager though, with the majority of Malibu Life Re’s assets set to be invested in more typical liquid strategies, as well as instruments such as treasuries.

Third Point will also provide services to Malibu Life Re, including the development of bespoke, liability-driven investment programs using its analytics, and the provision of corporate development, risk management and asset liability management services as well.

Third Point LLC Founder and CEO, Daniel S. Loeb, commented on the launch, “We are excited to form Malibu Life Re to provide attractive capital solutions in the life and annuity space in partnership with leading insurers.

“We expect that the nimble, multi-asset class investment strategy we have designed over almost thirty years can be leveraged to deliver favorable long-term risk adjusted returns for Malibu Life Re’s clients and partners.”

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