Dan Loeb of Third Point to Create a Reinsurance Company?
Dan Loeb’s Third Point appears to have created an entity called Third Point Re and hired the former CEO of Alterra Capital Holdings to run the new firm. The move would seem to mimic the creation of Greenlight Re, the reinsurance company founded by David Einhorn which has provided Greenlight Capital with a source of permanent capital base since its 2007 IPO. Permanent capital can provide a tremendous edge to investment managers and we surmise that this is Third Point’s main objective. However, we do note that Greenlight Re pays full hedge fund fees to Greenlight Capital, creating a high-margin, captive source of revenue for Einhorn – a fact that is probably not lost on Loeb either.
Joe Taussig may be behind the scenes in this deal. He worked with Einhorn on setting up Greenlight Re and has written extensively about the ideal structure for money management success.