Hildene Capital Management, a credit-based asset manager, has established a new reinsurance firm, dubbed Ludlow Re.

Based in Cayman Islands, Ludlow Re is a class B (iii) insurance firm that will provide reinsurance solutions to the insurance market across the globe.

For its opening transaction, the firm will reinsure nearly $1bn of fixed index annuity reserves under a quota share deal reached with an unnamed American life insurance carrier.

Ludlow Re received its B (iii) insurance licence from the Cayman Islands Monetary Authority in September this year.

Hildene founder and co-chief investment officer Brett Jefferson said: “Given its ability to provide long-term, flexible capital, Ludlow Re optimises Hildene’s robust asset management capabilities, helping us as we seek to enhance returns for our investors.

“Since Hildene’s inception in 2008, we have taken a prudent approach to managing the size and scale of our assets and will continue to execute on this approach with Ludlow Re — opportunistically adding to our portfolio only when we believe we can confidently invest in assets that produce attractive returns for our clients.”

Currently, Hildene is said to handle more than $12bn of assets for clients throughout its flagship private funds, customised managed accounts and securitised asset portfolios.

Hildene co-chief investment officer Dushyant Mehra said: “Hildene’s structured credit assets, particularly TruPS CDOs, align well with the duration and liquidity profile of life and annuity insurance liabilities.

“We believe insurers and asset managers can benefit from a symbiotic relationship — money managers receive access to insurers’ expansive capital base while insurers receive access to sophisticated investment opportunities they may not have otherwise.”