We are an advisory firm focused on advancing the interests of asset managers, insurers, reinsurers, and banks that have recognized the benefits of Structural Alpha and want to take advantage of them.
To the extent that alpha is the measure of added value that a portfolio manager contributes to the returns of his portfolio relative to the general market, Structural Alpha is the measure of the added value that a portfolio manager gains by executing his or her investment strategy through an insurer, reinsurer, or bank rather than executing an identical investment strategy in a fund or managed account.
In this context, we believe that Warren Buffett’s success has far more to do with his investing through Berkshire Hathaway’s insurance and reinsurance businesses than his stock picking. As such, we primarily advise asset managers who want to acquire and/or start a standalone insurer, reinsurer, or bank or start a Participating Reinsurer on the Multi-Strat Re platform and manage the assets of the resulting financial institutions in order outperform their funds or managed accounts, increase AuM from sources otherwise unavailable in a fund or managed account, and enjoy the stability of permanent capital.
When an asset manager decides to acquire and/or start a standalone insurer, reinsurer, or bank, and wishes to engage us to act on its behalf, we are paid monthly retainers plus reimbursement for out of pocket expenses. If the acquisition or startup succeeds, we also earn success fees, which consist of cash (less the cumulative amounts of monthly retainers paid) and warrants. The asset manager may terminate our engagement at any time without having to justify its decision, but will owe the success fees if it completes any similar transaction within two years of termination.
An asset manager that decides to start a reinsurer and is willing to commit some or all of the reinsurer’s initial capacity to the Multi-Strat Re platform may engage us to turnkey the startup for a flat fee plus a series of success fees based on raising capital, generating reinsurance float, and shareholder returns.
As part of our services for startups that wish to raise capital for the Multi-Strat Re platform, we also grant each reinsurer permission to use our copyrighted private placement memorandum at no additional cost. This PPM can be customized to fit the asset manager’s investment strategy at our expense (and reviewed by a law firm chosen by the asset manager at the asset manager’s expense, if the asset manager so chooses). In our experience, New York and London law firms will charge at least $1 million to write a similar offering document.
We also advise established insurers, reinsurers, and banks (as well as entrepreneurs with good insurance, reinsurance, or banking ideas) that want to raise capital and are willing to take it from asset managers, their investors, and/or the asset manager’s funds in exchange for permitting the asset managers to manage some or all of the assets of their given financial institutions.
When we advise insurers, reinsurers, banks, and entrepreneurs, we are paid a monthly retainer plus reimbursement for out of pocket expenses. We also earn success fees, which consist of cash (less the monthly retainers paid) and warrants. These clients may terminate our engagements at any time without having to justify their decisions, but will owe the success fees if they complete any transaction within two years of termination with any investor introduced to them during the period of engagement.