AlphaCat helps investors access insurance linked securities through managed funds and portfolios.

ALPHACAT

Formed in 2008, AlphaCat Managers is a Bermuda-based investment adviser for a series of insurance-linked securities funds and vehicles which are capitalized by a panel of global institutional investors

Highlights of the business include:

  • AlphaCat SEC-registered investment adviser1
  • Independent portfolio management, valuation and hedge fund operations
  • Integrated reinsurance transaction origination through Validus Services and risk modelling through Validus Research
  • Other back office functions provided by affiliates where possible
  • AlphaCat currently utilizes the transformer vehicles OmegaCat Re and AlphaCat Master Fund to transact with the reinsurance and capital markets, respectively
  • Affiliate AlphaCat Capital Inc. is the US based marketing office which is also registered with the SEC as an Investment Adviser1

AlphaCat is 100% wholly owned by AIG as the former Validus Group of companies was acquired by AIG on July 18, 2018

Advisers Act registration does not and should not be read to imply a certain level of skill or training.

 


LEADERSHIP TEAM

Paschal Brooks, CFA, is the Chief Executive Officer of AlphaCat Managers and is the Principal, President and Chief Executive Officer of AlphaCat Capital. Mr. Brooks joined AlphaCat Managers in 2011 and became the principal officer of AlphaCat Capital upon its establishment in 2015. Prior to joining AlphaCat Managers, Mr. Brooks was a Vice President on the insurance structured finance desk within the investment banking division of Goldman, Sachs & Co. from 2009 to 2011. In this position, Mr. Brooks advised insurance companies on risk securitization transactions including catastrophe bonds, sidecars and embedded value securitizations. From 2006 to 2009, Mr. Brooks was an Associate at Goldman, Sachs & Co. Prior to this role, Mr. Brooks was a Research Analyst at Alleghany Corporation from 2003 to 2006, where he evaluated investment opportunities in public and private markets across a range of industries. Prior to this role, Mr. Brooks was an Analyst in the financial institutions group of the investment banking division of Goldman, Sachs & Co. from 2000 to 2003. Mr. Brooks has a B.S. in economics from Duke University where he graduated in 2000 and is a CFA charterholder. 

 

Sun joined the AlphaCat team from our Validus Research office in Waterloo Canada in July 2013 where he was a Senior Catastrophe Risk Analyst. He has been with Validus since 2006 and holds Masters degrees in Accounting/Quantitative Finance from University of Waterloo, Ontario, Canada and Statistics from University of Western Ontario. Sun assists Paschal with analyzing reinsurance & cat bond transactions.

 

Kevin is a Fellow of the Association of Chartered Certified Accountants who joined the team in May 2013. He has a BSc (Hons) in Mathematics and Economics from the University of the West of England. He worked as an auditor in Oxford, England and then on moving to Bermuda spent five years as an account manager for a hedge fund administrator, specializing in ILS funds. 

 

David is a Fellow of the Institute of Chartered Accountants in England & Wales. He began his career as an auditor with PricewaterhouseCoopers in England in 1999, before moving to PwC Bermuda in 2003. He left audit in 2005 and spent 11 years in the fund administration industry in Bermuda prior to joining AlphaCat in 2016. David holds a BA (Hons) in French from the University of Leeds.

 

Christian joined the AlphaCat team in November 2016 and currently heads the business development team for our affiliate AlphaCat Capital. Prior to joining AlphaCat Capital, Christian spent 8 years at Risk Management Solutions. He holds a Bachelor of Arts in Economics with a certificate in Political Economy from Princeton University.

 

Chiara joined AlphaCat Managers in November 2018. She is a NY – barred, U.S. attorney with experience in finance, regulation, and corporate law, particularly in the areas of corporate governance, investment management law, operations and project/change management. Prior to AlphaCat, Chiara worked in the Bermuda office of a large U.S.-based asset manager and has worked at various U.S. financial services regulators. She holds a J.D. from Seton Hall School of Law as well as a B.A. in Economics with a minor in Environmental Science from New York University. 

 

Brant joined the AlphaCat team in July 2018 and currently heads the operations team. Prior to joining AlphaCat, he spent more than 16 years in alternative investment fund operations leading teams at both Whippoorwill Associates, Inc. and DW Partners, LP.  He holds a M.B.A. in Finance from New York University Leonard N. Stern School of Business as well as a B.S. in Finance from Oswego State University. 

INVESTMENT PHILOSOPHY

The existence of market inefficiency: The inefficiency makes it possible for disproportionate investment in skill and effort to pay off for our clients in the long term. 

The value of broad market access: Access to a broad universe of investments (through an established (re) insurer) is the first step to construct an attractive portfolio in the large, but fragmented catastrophe risk market.

An emphasis on rigorous risk quantification: It is our strongest belief, supported by abundant experiences and data, that applying rigorous risk quantification built on the latest science and intimate industry knowledge can create an edge in risk selection and portfolio construction

Focus and specialization: Specialization results in focused management attention and investment in resources and skills to build a best-in-class manager specialized in catastrophe risk.

Moderate use of hedging: For a fully collateralized catastrophe portfolio, we believe that hedging should only be used in moderation. We encourage our clients to size their reinsurance positions such that large losses are well managed within the context of their overall investment portfolio.

 

STRENGTHS OF THE PLATFORM

Broad Investment Universe

  • AlphaCat focuses on a broad reinsurance universe including traditional reinstateable reinsurance in addition to collateralized reinsurance and catastrophe bonds
  • Underwriters maintain an extensive contact network with the major brokers and global reinsurance purchasers

Extensive Investments in Analytics

  • Validus Research employs over thirty dedicated scientists, catastrophe modelers and software developers to deliver the Validus View of Risk
  • All reinsurance submissions are reviewed and fully quantified to build a comprehensive view of the global reinsurance opportunity set

Robust Infrastructure

  • AlphaCat Managers is an SEC-registered investment adviser2

2 Advisers Act registration does not and should not be read to imply a certain level of skill or training.

 

INSURANCE LINKED SECURITIES

Insurance Linked Securities (ILS) are financial instruments whose fundamental value is determined by insurance losses, caused by natural catastrophes such as major earthquakes and hurricanes. As the returns of ILS are primarily driven by natural catastrophes, when carefully structured, they are generally uncorrelated with the overall financial market, which can make ILS an attractive asset class for capital market investors.

Investors are often attracted to Insurance Linked Securities due to their low correlation with traditional capital markets assets.

Direct reinsurance is insurance for insurance companies and can be provided for any portfolio of business. The most traditional form is catastrophe insurance, whereby an insurance company buys protection from a reinsurance company, who issues a reinsurance contract which transfers the risk on an indemnity basis.

Retro(cession) cover in its simplest form is insurance for a reinsurance company, and protects them against losses arising from catastrophic events. Generally the cover is purchased by the reinsurance company from another reinsurance company, and is very similar to direct reinsurance for insurance companies. The cover is provided on an indemnity basis and transfers risk from one reinsurer to another. It is typically the most volatile market in terms of price movement and availability.

Catastrophe reinsurance is insurance for those insurance companies who have a portfolio of natural catastrophe business. Reinsuring these risks can help to manage earnings volatility and reduce the amount of capital needs to support exposures.

Cat Bonds are privately offered insurance linked securities that transfer a specified set of risks from a sponsor to investors, Cat Bonds are generally not publicly traded, trading solely in over the counter markets. They emerged from a need by insurance companies to alleviate some of the risk they would face if a major catastrophe event occurred. In short, they are insurance for insurance and reinsurance companies, and are provided by issuing bonds on to investors. Most Cat Bonds are structured to offer insurers the benefit of fully collateralized reinsurance, which significantly mitigates the credit risk an issuer would normally accept from rated counterparties in the reinsurance market. They are generally categorized into 4 basic trigger types.

Cat Bonds are generally categorized into 4 basic trigger types:

  • Indemnity: triggered by the issuer's actual losses so the sponsor is indemnified, as if they had purchased traditional catastrophe reinsurance
  • Index to industry loss: triggered when the insurance industry loss from a certain peril reaches a specified threshold
  • Modeled Loss: triggered when there is a larger event and modelled losses are above a specified threshold
  • Parametric: triggered when there are natural events within the parameters set out by the contract. For example, a hurricane bond could be indexed to wind speed above an agreed level at a number of locations. Should wind speeds be recorded above this level at those locations, the bond is triggered
  • Parametric Index: triggered when a certain set of conditions are met (as above) but are linked to the losses the issuer may face as a result of the natural conditions

Industry Loss Warranties, or ILWs, are a type of reinsurance contract through which one party will purchase protection based on the total losses arising from a catastrophic event to the entire insurance industry rather than their own losses. The industry loss therefore triggers the pay-out. Industry insurance losses are calculated and reported by a thirty party index provider. The first contracts of this type were traded in 1980s.

Specific types of ILWs are:

  • Live Cat: contracts which are traded whilst an event is in progress
  • Dead Cat: contracts which are traded on an event that has already occurred by total industry losses are not yet known
  • Back-Up Covers: contract provide protection for events that occur following the catastrophe.

CONTACT US

T 1.441.278.9000

investors@alphacat.bm

AlphaCat Managers Ltd.

29 Richmond Road,
Hamilton HM 08 Bermuda

 

AlphaCat Capital Inc.

300 Kimball Drive, Suite 500,
Parsippany NJ 07054