UBS O'Connor Joins Enstar, Extending Hedge Fund Push to Bermuda

  • Hedge fund will manage money for reinsurer formed by Enstar
  • Enstar's Nicholas Packer named CEO of new Aligned Re venture

UBS O’Connor LLC, the $6 billion hedge-fund unit within Switzerland’s biggest bank, will manage money for a new Bermuda-based reinsurance company formed by insurer Enstar Group Ltd.

Aligned Re Ltd. is expected to be funded by third-party capital along with investments from the Enstar, which recently contributed $100 million, according to a regulatory filing Thursday from the insurer. The new venture will assume some of Enstar’s risks.

Goldman Sachs Group Inc. and BlackRock Inc. have also agreed to oversee portfolios for reinsurance ventures that raised funds this year. U.S. hedge-fund firms including David Einhorn’s Greenlight Capital entered the offshore industry years ago, giving the money managers a tax advantage for their investments and a source of permanent capital. Nicholas Packer, who is an executive vice president at Enstar, will be chief executive officer of Aligned Re.

“As a start-up company, Aligned Re will consider hiring additional executives during the ramp-up period of its operations,” Enstar said in the filing.

Canada Pension Plan

Enstar traces its roots to the early 1990s when executives including Packer pushed into the runoff industry, taking on business from primary carriers that stopped selling some lines of coverage. The Canada Pension Plan Investment Board agreed this year to take a 9.9 percent stake in Bermuda-based Enstar.

The insurer’s shares slipped 2 cents to $151.92 at 12:06 p.m. in New York and have dropped less than 1 percent this year. Gregg Rosenberg, a spokesman for UBS Group AG, declined to comment on the venture.

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