The launch of Re comes alongside the announcement of a $14 million seed round with participation from Tribe Capital, Defy, Exor, Stratos, Framework, Morgan Creek Digital, SiriusPoint and a number of prominent angel investors.
The protocol, built on the Avalanche blockchain, provides investors with access to a massive and uncorrelated asset class: insurance premiums. While backing insurance policies collectively dates back 334 years to the inception of Lloyd’s of London, the business remains opaque and inaccessible to most. Re aims to change that.
“The benefits Re brings to the market are multi-faceted: 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; administrative overhead will be lower and cost savings will inure to the benefit of insurance companies and policyholders; and finally for Members who provide capital, they earn uncorrelated yields that are comparable to high yield fixed income.” said Karn Saroya, CEO of Re.
Re’s capital providers, or Members, provide the financial backing for baskets of insurance policies to earn insurance premiums and yield. Today, Re already backs thousands of drivers in Texas and California and in coming weeks will be backing thousands of small businesses across the US. In the past few months, Re has assessed more than $300 million in potential premium from insurance programs. With the new funding, Re will build out its reinsurance underwriting pipeline.
Re works with distributed underwriting teams with deep domain expertise, or Syndicates, to assess the economic merits of insurance programs brought to the protocol. These teams tend to have a niche focus on specific industry segments and/or lines of business. They have expertise in pricing and disciplined underwriting, for which they need reinsurance.
Re’s main application will be built on Avalanche’s primary network, with private information warehoused on a Subnet, creating greater transparency and flexibility using the fastest smart contracts platform in the industry. Subnets are custom, app-specific blockchains that can be tailored to an app’s exact needs. Avalanche launched in September 2020, ushering in a new era for blockchains with near-instant transaction finality.
Arjun Sethi, Co-Founder and Partner at Tribe Capital, which incubated Re under its Tribe Crypto Labs umbrella, added: “The opportunity set for a decentralized approach to reinsurance is immense – there’s nearly a trillion of existing insurance surplus to be tokenized, and a huge amount of capital on the sidelines that will start to earn (re)insurance premiums in the near future. Re is ideally positioned to capture the growth in this new marketplace that is unlocked through blockchain technology.”
From a timing perspective, Re is at the perfect entry point to launch into a growing addressable market, with insurance premiums rising globally. Further, the Managing General Agent program space, where specialized teams create unique insurance products and do everything but accept the risk of loss, has continued to explode upwards to $70B in the past year.
“We’re proud to support Re through the Startup with Chainlink program in their mission to build a decentralized global reinsurance market that provides users with more transparency and delivers cost savings. By leveraging blockchain technology, smart contracts, and oracle networks, Re can help connect the reinsurance market to the DeFi space in a manner that is empowering for involved parties,” stated Oliver Birch, GTM partnership leader at Chainlink Labs.
Re is now inviting underwriters and actuaries to apply for Syndicate roles on the protocol, having recently partnered with Joe Gaito and Jason Hoffman of Freedom Re Underwriters as the protocol’s first independent Syndicate. Further, David Hampson, the former CEO of Willis Programs has joined Re as a strategic advisor and independent board member to guide reinsurance operations.
Re is a fully-collateralized reinsurer subject to regulatory oversight and approval that connects alternative capital providers to a nearly $1T reinsurance market, providing investor access to an otherwise opaque asset class. The Re protocol is a web3 application that drives a level of transparency around capital position and performance that is unrivaled by traditional reinsurers to the benefit of partners, investors and regulators.