AlphaCat Managers Ltd., formed in 2008, is a core element of the Validus Group’s strategic initiative to expand into capital market activities by participating in the market for Insurance Linked Securities (ILS). 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, making ILS an attractive asset class for capital market investors.
AlphaCat Managers helps investors take full advantage of this uncorrelated asset class through various funds and sidecars, accessing the market via AlphaCat Reinsurance Ltd., a Bermuda-based provider of fully collateralized property catastrophe reinsurance and retrocession capacity. The company invests in private reinsurance transactions, as well as catastrophe bonds, a common type of ILS issued by insurance and reinsurance companies. It leverages the Validus Group’s extensive business sourcing, underwriting, research and analytic capabilities to construct ILS portfolios subject to prudent risk constraints.