Institutional investors have been attracted to insurance-linked securities due to their low correlation to equity markets and the inherent return potential for more than two decades. But in recent years, this market has fundamentally changed: with the inflow of approximately USD 100bn of capital and reinsurance margins normalizing globally, fully collateralizing each transaction has weighed on risk-adjusted returns and pushed investors into higher risk segments of the market in search for yield.
Tangency Capital Ltd. was founded in September 2017 by Dominik Hagedorn, Michael Jedraszak and Kai Morgenstern with the goal to enable institutional investors to access diversified insurance risks through pro rata participations on risk portfolios of re/insurance companies globally. As a consequence of the diversified nature of these portfolios, our portfolio companies can offer us non-recourse leverage, thereby improving risk-adjusted returns.
We are the first institutional investor-focused fund for these types of investments and are valued by our portfolio companies as a trusted counterparty.
Re/insurers globally are increasingly looking to partner with institutional capital to support their business beyond traditional debt and equity. Key drivers for this need are increasing demand, counterparty consolidation and capital efficiency. Through our co-investment approach, we enable these companies to continue to focus on their most profitable businesses and capture growth potential.
By aligning ourselves with the experts in this field, we are able to leverage analytics, underwriting, claims handling and reserving capabilities of our portfolio companies, thereby benefiting from a vast set of data and analysis that we use in the investment process.
Our investment approach provides a meaningful amount of capital efficiency offered by portfolio companies on a non-recourse basis, as reinsurers pass on the benefit of operating via rated balance sheets rather than collateralizing individual transactions.