Hedge funds without insurance expertise benefit Allianz, says Chris Fischer Hirs, head of Allianz’s specialty insurance business.
Hedge funds have been pushing assets into insurance bets for wagers unrelated to the financial markets, reports Bloomberg. Insurance investments allow for a chance of better returns than bonds in low yield countries like the U.S. Some investors, including Warren Buffet, have been wary of hedge fund participation in reinsurance, saying it may mute prices, but many insurers say the hedge funds are welcome partners. Writes Bloomberg:
“Hedge funds bring capacity to the market,” Fischer Hirs said in an interview in Rio de Janeiro Wednesday. “Do they bring expertise? No. And what are we good at? We’re good at underwriting risk.”
Hedge funds aren’t able to copy the expertise of the insurance funds to really known the industry, says Fischer Hirs. Their business capacity is an opportunity for everyone, not a threat, he says. Besides, traditional insurance companies are here to stay. For hedge funds, this may just be a fad.
Photo: Ramesh NG