Real-world asset (RWA) blockchain-powered platform Re offering tokenized reinsurance, has launched its first open-ended reinsurance fund on the Avalanche network.
Initial investors include Nexus Mutual, with a $15 mn allocation, and the Vista fund from Ava Labs, which made a smaller deposit.
Re, a DeFi reinsurance protocol, offers accredited investors exposure to the massive, uncorrelated asset class of insurance premiums. Re recently secured $7 mn in venture capital, led by Electric Capital, following a $14 mn seed round in 2022.
The company, regulated in the Cayman Islands, aims to bring blockchain transparency to the reinsurance sector, traditionally seen as opaque and conservative. Re aspires to operate as a decentralized equivalent to Lloyd’s of London.
CEO Karn Saroya highlighted the significance of reinsurance, which supports insurance companies by covering certain risks. Reinsurance plays a crucial role in the financial ecosystem, with about $1 tn in premiums annually.
Integrating blockchain will enhance settlements, operational efficiency, and transparency in capital reserves.
Re’s CEO Karn Saroya
This aligns with the broader trend of tokenizing traditional assets for improved trading and operational benefits, a movement embraced by major financial players like BlackRock and Citi.
Re’s new fund will initially focus on low-volatility insurance products, such as property, trucking, aviation, and workers’ compensation, avoiding catastrophic risks (see 3 Key Elements of the Blockchain Technology).
The fund targets an annualized yield of up to 23% and is available to U.S. accredited investors and international investors who complete Re’s KYC process.
The minimum deposit lock-up period is one year, with redemptions available as collateral is released from the insurance companies. Saroya compared the investment structure to high-yield fixed income, making it appealing to DAOs and ecosystem funds.
Re, a blockchain-powered reinsurance company Re, in 2022 raised $14 mn in seed-round funding to build a decentralized system that aims to fill a function similar to the Lloyd’s of London insurance market.
Tribe Capital, Defy, Exor, Stratos, Framework, Morgan Creek Digital and SiriusPoint participated in the round, alongside a number of angel investors.
We’re building a decentralized global insurance transaction layer that settles any kind of insurance risk in a way that’s transparent to regulators, partners and investors
CEO Karn Saroya
Re has assessed more than $300 mn in potential premium from insurance programs, it said, and will use the new funding to expand its reinsurance underwriting pipeline. The company is looking for underwriters and actuaries to apply for syndicate roles on the protocol, and has already appointed Joe Gaito and Jason Hoffman of Freedom Re Underwriters as its first independent syndicate.
David Hampson, former CEO of Willis Programs – a unit of global insurance broker Willis Group Holdings – has joined the company as a strategic adviser and independent board member.
by Peter Sonner
