Last year was the worst on record for insurance losses from natural disasters, including hurricanes Harvey, Irma and Maria. But it also led to further capital-raising by funds in expectation of investor demand because of higher rates in the sector, particularly at renewal dates in June and July.

Tangency Capital, which has offices in London and Bermuda and will invest directly in non-life reinsurance risks, was founded by Dominik Hagedorn, Michael Jedraszak and Kai Morgenstern.

Investors have been attracted to funds that invest in catastrophe bonds and other insurance-linked securities as a way to gain exposure to the reinsurance market, which has higher returns than many asset classes. Catastrophe bonds, for example, pay a high coupon but default if a particular natural catastrophe occurs.

Despite capital-raising, only one insurance-linked hedge fund has launched so far in 2018, out of a market of 82 funds, according to data from industry tracker Preqin.

While funds in the sector have continued to extract cash from investors, they have also suffered losses.

The CATCo Reinsurance Opportunities Fund, managed by Market CATCo Investment Management, last week said it was increasing its loss reserves, highlighting greater losses in the Caribbean from Hurricane Irma. The announcement led to a 20 percent drop in its share price.

(Reporting by Maiya Keidan and Carolyn Cohn; Editing by Simon Jessop and David Goodman)