INVESTING IN TARTAN RE
Reinsurance is one of the few investment strategies that has almost no correlation to the stock and bond markets. An investment opportunity unique to any investor's portfolio!
TARTAN RE . . . THE INVESTMENT OPPORTUNITY
The reinsurance investment strategy presents the opportunity to add equity-like returns that are uncorrelated with the risks and returns of other assets in an investor's portfolio (stocks, bonds and other alternative investments). The strategy has the potential to generate high single-digit to low double-digit returns on average over a five-year to 10-year investment horizon, regardless of the direction of the capital markets.
Simply put . . . stock and bond markets crashes don’t usually have anything to do with reinsurance claims or risk. The reverse is also generally true – reinsurance claims or risk tend not to cause bear markets in stocks and bonds. The combination of the lack of correlation and the potential equity-like returns results in a more efficient portfolio for an investor, specifically a portfolio with a higher Sharpe ratio (a higher return for each unit of investment risk).
The reinsurance industry can be a rather lucrative business and many reinsurance stocks have above average track records of delivering market-beating performance over long periods. In the case of the reinsurance company having potential tax advantages (Cayman Island based) on profits, this makes for a compelling dual reason for investment.
Unlike other industries that are subject to their capital working solely on their products or services, a reinsurance company can be a highly profitable business because it may generate both investment profits and underwriting profits. Two sources of revenue/profit from the same capital utilized.
In short... reinsurance investment has historically been a good uncorrelated strategy that has generated equity-like returns with fixed-income-level risk.
