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Bailey McCann, Opalesque New York:

Hedge fund managers have a new option for protecting their business. Launching this week at the annual MFA Conference, Statsure Financial is offering a captive insurance solution for hedge fund managers.

Many large companies have captive insurers - insurance companies which are owned and managed by the company itself. The goal of a captive insurer is to cover insurable events, while also limiting the impact to the overall business if an adverse event occurs. Statsure Financial has created a captive insurer that is designed to work with alternative investment firms. The firm was founded by hedge fund industry veterans including Joe Taussig; Esther Goodman; Marc Goodman and Ken McCord, co-founder of KFL Capital Management.

Managers that work with Statsure set aside a capital reserve that is a combination of equity and pre-paid insurance premium that will be used to cover claims if there is a run on the fund. Hedge funds are also able to avoid taking commercial market risk that comes with using an outside firm.

"You can't insure performance, but you can limit how much of a hit your personal wealth is going to take if you have a bad year and have to fold," Taussig tells Opalesque.

Taussig adds that as he watched captives become more popular in other industries it seemed like a "no-brainer" to create a captive insurer for fund managers. It's still early days, but Taussig and the team at Statsure have had positive feed......................

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