Re-Insurance Company Institutional Investor Mandate Interview

TL;DR

Audi discusses the role of reinsurance companies in managing risk for primary insurance companies and provides insights on investment criteria, including fund size, current income focus, and rating structures.

Transcript

well this is richard wilson from the family office club and today we're doing an investor mandate interview with uh audi welcome adi hi richard thank you for having me sure and i know you wear a couple of different hats uh what type of an investor or investment firm do you represent i oversee alternatives at a six billion dollar reinsurance company... Read More

Key Insights

• ✳️ Reinsurance companies play a vital role in the insurance industry by taking on risk from primary insurance companies, allowing them to underwrite more risk.
• 🙌 Approaching a reinsurance company for capital raising requires considering factors such as fund size, investment stage, current income focus, and rating structures.
• ☠️ Investments rated with income and AAA ratings are preferable, and structures approved by regulators are more favorable.
• 💝 Audi's family office invests in late-stage opportunities alongside the reinsurance company and explores early-stage or niche late-stage investments outside the mandate.
• 🚦 Audi is particularly interested in vertical SaaS companies, which offer mission-critical software for niche industries and have promising growth potential.
• 👻 COVID-19 has accelerated the growth of some SaaS companies, allowing them to acquire competitors at favorable valuations.
• 😷 Due diligence is critical in investing, and investors should not hesitate to ask tough questions and conduct background checks to ensure transparency and trust.

Questions & Answers

Q: What is the difference between an insurance company and a reinsurance company?

Reinsurance companies back smaller insurance companies by taking on some of the risks they underwrite, making them stronger balance sheet backers for the insurance industry.

Q: What is the threshold for approaching a reinsurance company for capital raising?

While it depends on the company, typically, reinsurance companies prefer investments above $500 million and funds that are not in their initial stages.

Q: What criteria do reinsurance companies look for when considering investments?

Reinsurance companies prioritize investments with high single current and low to mid double total returns. They prefer rated structures and focus on the underlying opportunity and collateral.

Q: How does Audi's role on the reinsurance side differ from his family office investments?

Audi's family office makes private market commitments by co-investing alongside the insurance company and also explores opportunities outside the company's mandate, including early-stage and niche late-stage investments.

Summary & Key Takeaways

• Audi oversees alternative investments at a $6 billion reinsurance company while also managing investments for his family. He invests in both late-stage opportunities within the company's mandate and early-stage outside the mandate.

• Reinsurance companies help primary insurance companies manage risk by taking on a portion of the risk they underwrite, enabling them to underwrite more risk and spread it evenly across the industry.

• When approaching a reinsurance company for capital raising, fund size and stage, current income focus, and rating structures are key factors to consider. Opportunities rated with income and AAA ratings are preferable, and structures approved by regulators are more favorable.