While A.M. Best has assigned ratings of A-minus or better to five hedge fund reinsurers, Standard & Poor’s hasn’t yet rated any of the five and remains “skeptical” of their strategies, representatives of the rating firms report.

Executive Summary

S&P's Kevin Ahern explains the rating agency's skepticism about hedge fund reinsurers, five of which have been given A-minus or better ratings by another rating agency, A.M. Best.

A hedge fund reinsurer (HFR) is “an entity in which the hedge fund primarily acts as a conduit for attracting the investors in the reinsurer and then manages the assets for a fee,” according to an Aug. 27 A.M. Best briefing titled “Focus Remains on Credit Fundamentals in Rating Hedge Fund (Re)insurers.”

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