Stone Ridge Asset Management, a New York-based investment firm specialising in alternative risk strategies, has posted stellar results for its reinsurance and insurance-linked securities (ILS) funds in 2024, building on record-breaking performance in 2023, according to a report by Artemis.

The company’s flagship ILS fund delivered a 92% cumulative return over two years, driven by favourable catastrophe reinsurance market conditions and innovative financial structuring. At the same time, its Bermuda-based casualty reinsurer, Longtail Re, significantly outperformed industry benchmarks with a 20% annualised return on equity (ROE) since its inception.

The report cites Founder and CEO Ross Stevens as revealing in his annual investor letter that the firm achieved $4bn in trading profits in 2024 across its various ventures. While specific contributions from the reinsurance and ILS businesses were not disclosed, these segments account for a substantial portion of the firm’s $10bn in assets under management.

Longtail Re, Stone Ridge’s casualty reinsurer, employs a differentiated strategy that combines hyper-diversified liabilities from multiple reinsurers with short-duration fixed-income investments. This approach has enabled Longtail Re to achieve industry-leading metrics, including: -1% to -3% borrowing costs, the lowest in the sector; a 6.3% return on assets (ROA), three times higher than the top global reinsurers; and a 20% annualised ROE, four times the industry average.

Stevens anticipates Longtail Re will manage approximately $4bn in assets by the end of 2025.

Stone Ridge’s catastrophe-focused ILS funds have also seen success. Through partnerships with leading global reinsurers, the company has supported approximately $110bn in catastrophe reinsurance capacity and purchased $9bn in catastrophe bonds.