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Ritchie Capital Management - Life insurance


Count of distinct funds: 2

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Ritchie Capital Management (website), a fund founded in 1997 by Thane Ritchie, sought bankruptcy protection for two Dublin, Ireland-based funds that lost more than $700 million on investments in life insurance settlements. According to a June 21 Bloomberg article:

The hedge-fund manager asked the U.S. Bankruptcy Court in Manhattan to approve a $17 million interim loan from ABN Amro Holding NV as part of $30 million in financing for the funds. They owed ABN Amro $436.5 million as of April 30, Lisle, Illinois-based Ritchie said in court filings yesterday.

The bankruptcies follow a May 2 lawsuit in which Ritchie accused Coventry First LLC, its partner in the insurance investments, of concealing a government investigation into fraud against policyholders. The firms jointly bought life-settlement plans -- bets that insurance payouts will exceed the premiums. ...

The Chapter 11 filings cover Ritchie Risk-Linked Strategies Trading (Ireland) Ltd. and Ritchie Risk-Linked Strategies Trading (Ireland) Ltd. II. They listed debt of $811 million and an unspecified amount of assets.

The funds were formed in 2005 to invest in life- settlements, where wealthy individuals over age 65 sell their policies for less than the death benefit and more than the cash- surrender value. The buyer continues to pay the premiums, betting that the named-beneficiary of the policy will die soon enough to make a profit.

The Ritchie companies bought policies from Coventry and its affiliate LST I LLC, intending to profit either from a securitization or from collecting death benefits.

Ritchie said it was sold "non-conforming" policies by Coventry and its affiliate LST I LLC, which prevented them from being securitized. That led to a "precipitous decline" in the funds' assets that Ritchie said eventually led to its bankruptcy filing.

Curiously enough, Coventry has filed a request to purchase the assets of the two imploded funds from Ritchie Capital.

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Krellan at 05:30 2008-07-02 said:

Here's what appears to be a long narrative story about an imploded hedge fund, Ritchie Capital Management, #3 on the list. Unfortunately I don't have a WSJ subscription, so can't see the entire text. Permalink

Aaron at 19:29 2008-07-05 said:
Here's a free blurb:

I am researching them for an ailing post so I will post more if I find anything.

Interestingly, Ritchie was fined $40M earlier in the year by the SEC for illegal "late trading" Permalink

Aaron at 19:59 2008-07-05 said:
admin note: I've merged this topic into the "official" Ritchie (autopost) topic, appearing on the new ailing entry I just put together (see link at the top of this topic). Permalink
Cheetah at 01:21 2011-01-28 said:
hi,.. Ritchie Capital Management, L.L.C. is an alternative asset management firm with interests in private equity, venture capital, real estate, energy, and insurance. Ritchie Capital has several locations, including offices in Wheaton, IL, New York, NY, and Menlo Park, CA.

thanks,.. Permalink

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Important: This fund is on our list of hedge funds that have "imploded" (see also ailing lenders). However, please note that "imploded" is a somewhat subjective. The "imploded" list contains hedge funds (or other unregulated and autonomous speculative investment funds) which have gone through some sort of permanent adverse change. This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid mark-downs in net asset value; or abnormal "bail-out" by corporate parents or peers in order to avoid write-downs and provide liquidity. The funds are of any type and sector.