Opalesque: Legeis Rethinks Alternatives and Insurance

Bailey McCann, Opalesque New York:

A group of insurance industry veterans have come together to form Legeis Capital. Legeis is designed to provide reinsurers with access to public and private investments that typically have higher returns than the fixed income portfolios common within the insurance industry. Legeis works with reinsurers and investment managers on portfolio construction with the goal of keeping investment fees low.

Legeis is led CEO Michael Siegel, who was previously CEO of RBC Alternative Asset Management and Chairman Michael Morrissey, who was CEO of the International Insurance Society. Joe Taussig, founder of Taussig Capital serves as Director.

In an interview with Opalesque, Siegel says that reinsurers are faced with a unique set of challenges given where interest rates are today. "There's a recognition within the insurance industry that it needs to diversify portfolios to account for how the market has changed," he says. "But there is still a lot of education that needs to happen about how to do that while meeting the needs of policyholders and staying within regulatory guidelines. We hope to provide that expertise."

Reinsurance has been a popular vehicle among hedge fund managers because setting up a reinsurer can provide a source of permanent capital. However, those reinsurers and others have come under pressure from ratings agencies because investments in alternatives are typically unrated and higher risk. Legeis builds on its understanding of public and private investing, as well as insurance to help reinsurers structure portfolios that aren't as likely to come under pressure from ratings agencies and can help mitigate P&L volatility.

Legeis is also set up to work with insurers on building ESG portfolios. Sustainable portfolios are growing in popularity among institutions but insurers often require bespoke solutions due to regulatory concerns.

"Different insurers are going to have different goals," Siegel explains. "So we aren't here to say they should allocate to any specific asset class. What's good for property and casualty reinsurers might not make sense for a life insurance company. But we can work with them to identify portfolio needs and find the right mix."

This article was originally posted on opalesque