Randy Swan is Founder of Swan Wealth Advisors, an SEC-registered RIA that has used their low-risk “Defined Risk Strategy” (DRS) to generate +9% annualized returns for investors since 1997. The structured strategy utilizes options for downside protection, an instrument that Swan likens to be “investment insurance” which investors should use in the same way that people use insurance in everyday life. During three of the last four down years of the S&P 500 (2000 – 2002 and 2008), Swan’s DRS strategy yielded positive returns (up to 12%). In 2008 when the S&P 500 dove 37%, the Defined Risk Strategy protected capital with a modest drawdown of only -4.5%. Adding up those four years, the S&P lost over 80% while DRS was positive by over 18%. For more information on Swan click here.
This Opalesque.TV interview profiles the launch of Swan Reinsurance, and why a reinsurance company can create higher ROE’s in a tax efficient manner by investing the equity invested plus the additional premium dollars charged for reinsurance in Swan’s Defined Risk Strategy. Although reinsurance is considered risky by some managers and investors, Swan Reinsurance can limit liability by not only utilizing its proven Defined Risk downside protection strategy, but by defining contractual limits for the insurance business the firm is underwriting.
Swan Reinsurance does not underwrite catastrophe risk (earthquake, hurricane), it only underwrites predictable high frequency, low risk areas such as workers compensation. These types of reinsurance are “high frequency” because they have lots of small claims and a long history which can be more easily quantified, making them much more predictable.
- History of Swan Wealth Advisors and the Swan “Defined Risk Strategy”
- Why smart money has used reinsurance the same way as David Einhorn”s Greenlight Capital Re, Ltd. (NASDAQ:GLRE) and Dan Loeb’s Third Point Reinsurance Ltd (NYSE:TPRE)
- How to make money using options
- Strong focus on managing downside risk
- Why is Randy Swan getting into Reinsurance?
- “Warren Buffett” Premium Float Model provides higher ROE’s in a tax efficient manner
- Investor demand for reinsurance vehicles
- Addressing liability concerns
- The Multi-Strat Re Platform
Click here for more information on Swan Re.
Randy Swan, CPA, President, developed the Defined Risk Strategy (DRS) in 1997 to protect clients from large losses. DRS has been ranked number 1 by Pensions & Investments and 5 Stars by Morningstar over various time periods. Before starting Swan, Randy was a KPMG Senior Manager working in the Financial Services Group, primarily with insurance companies and risk managers. His previous work experience helped Randy design the DRS by using the options market in a similar fashion to insurance companies that offload risk to others in the insurance market. Randy is a frequent speaker at industry conferences such as the Options Industry Council’s Wealth Summit, the Alternative Investment Summit and more. In addition he can be heard on Options Insider Radio (Options Insider Radio Program). Randy is a 1990 graduate of University of Texas with an MPA (Master’s Degree in Professional Accounting).