AQR Capital Management, a risk-balanced investment manager, headed by Clifford Asness exited its reinsurance business amid a challenging market environment.
Assness together with David Kabiller, John Liew, and Robert Krail co-founded AQR Capital in 1998. The firm has $131 billion of assets under management (AUM) as of March 31.
According to media reports, AQR Capital’s reinsurance unit stopped writing new or renewal business on April. AQR Re Management is registered in Bermuda, and it has been operating for approximately the years. The reinsurance business has around $440 million investments in the industry primarily through its two insurance-linked funds.
AQR Capital’s reinsurance business generated 4.7% in annualized net returns and 15.8% in net returns since inception.
Main reason behind AQR Capital’s decision to close reinsurance unit
A spokesperson for AQR Capital previously explained that the significant changes in the fundamentals of the reinsurance industry prompted the firm to shut down AQR Re Management.
“While the diversification benefits and relative returns of reinsurance as an asset class remain attractive, we have come to the conclusion that due to consolidating market dynamics, it will become increasingly difficult to put larger amounts of capital to work to achieve attractive risk?adjusted returns for our investors, and ever more important to be in multiple lines of business, many of which we are not currently in,” according to the spokesperson.
AQR Capital’s recent investments
AQR Capital acquired 3,695,296 shares of LyondellBasell Industries, a global independent chemical company during the fourth quarter of 2014. The firm also bought 2,105,780 shares of Delphi Automotive, a manufacturer of vehicle components.
In January, Asness noted, “Small quality stocks outperform large quality stocks, and small junk stocks outperform large junk stocks, but the standard size effect suffers from a size-quality composition effect.”
AQR Capital announced its plan to donate more than $15 million to the London Business in January. The firm’s donation will be spread out over ten years to support research and academic prices and to fund an annual conference.
AQR Capital’s donation is also intended for the creation of the AQR Institute of Asset Management that will focus on the importance of academic research to gain advantage in the highly-competitive fund industry.