The Best Client Is The One You Create

Investments ▶ Hedge funds and insurers have a special relationship ▶ Money managers “essentially view it as permanent capital”

Dan Loeb, manager of Third Point hedge fund, is also a co-founder of the publicly traded, Bermuda-based insurance company Third Point Reinsurance. The stock has had its ups and downs, but it’s always produced at least one winner: Loeb’s hedge fund company. Since 2013 the insurer has paid $98.8 million in fees to Third Point and its affiliates for managing its money.

David Einhorn, known for his Greenlight Capital hedge fund, has a similar arrangement. Cayman Islandsbased insurer Greenlight Capital Re has paid more than $280 million since 2007 in management and performance fees to Einhorn’s DME Advisors, whose investments mirror those of the Greenlight fund.

Third Point Re has pitched its stock as a way to benefit from Loeb’s investing acumen. While