Blockchain-powered reinsurer Re raises $14 million in seed round

Re, a blockchain-powered reinsurance company, has raised $14 million in seed-round funding to build a decentralized system for investors that 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, along with a number of angel investors.

Built on the Avalanche blockchain, launched in September 2020, the protocol provides investors with a way to back insurance. The reinsurer works with underwriting teams, also called Syndicates, to assess the financial benefits of insurance programs included in the protocol.

Karn Saroya, CEO of Re, said: “The benefits Re brings to the market are multi-faceted: We are building a decentralized global insurance transaction layer that settles any type of insurance risk, in a way that is transparent to regulators, partners and investors; administrative overhead will be lower and cost savings will benefit insurers and policyholders; and finally, for members who provide capital, they earn uncorrelated returns comparable to high interest rates.”

According to the announcement, Re’s main application will be built on Avalanche’s primary network, with private information stored on a subnet, creating greater transparency and flexibility by using the fastest smart contract 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 opportunities for a decentralized approach to reinsurance are huge – there is almost a trillion in existing insurance surplus to be tokenized, and a huge amount of capital on the sidelines that will start earning (re)insurance premiums in the near future.

“Re is ideally positioned to capture the growth of this new marketplace being unlocked through blockchain technology.”

Oliver Birch, GTM Partnerships Manager at Chainlink Labs, commented: “We are proud to support Re through the Startup with Chainlink program in their mission to build a decentralized 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 way that empowers the parties involved.”

Re has assessed more than $300 million in potential premiums from insurance programs, and has said the new funding will be used to expand its reinsurance underwriting.

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.