Re, a blockchain-powered reinsurance company, has raised $14 million in seed-round funding to build a decentralised system for investors which will allow them to gain exposure to “a massive and uncorrelated asset class” that is insurance premiums.
Tribe Capital, Defy, Exor, Stratos, Framework, Morgan Creek Digital and SiriusPoint participated in the round, alongside a number of angel investors.
Built on the Avalanche blockchain, launched in September 2020, the protocol provides investors with a way of backing insurance policies. The reinsurer works with underwriting teams, also named Syndicates, to assess the economic merits of insurance programs brought to the protocol.
Karn Saroya, CEO of Re, said: “The benefits Re brings to the market are multi-faceted: We’re building a decentralised 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.”
According to the announcement, 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.
Arjun Sethi, Co-Founder and Partner at Tribe Capital, which incubated Re under its Tribe Crypto Labs umbrella, added: “The opportunity set for a decentralised 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.”
Oliver Birch, GTM partnership leader at Chainlink Labs, commented: “We’re proud to support Re through the Startup with Chainlink program in their mission to build a decentralised 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.”
Re has assessed more than $300 million in potential premium from insurance programs, and has said that the new funding will be used to expand its reinsurance underwriting pipeline.
The company is looking for underwriters and actuaries to apply for Syndicate roles on the protocol, and has already appointed Joe Gaito and Jason Hoffman of Freedom Re Underwriters as its first independent syndicate.