Reinsurance is the financial backstop behind every insurance company on earth, the mechanism that guarantees insurers can pay their claims when losses pile up or risk becomes too concentrated. It's a $1 trillion annual premium market that has been almost entirely inaccessible to retail and DeFi investors.
"This is one of the biggest opportunities in DeFi. This is civilizational technology. It enables risk taking everywhere by folks who want to take risks and build things. It is only natural that it ends up onchain."
Karn Saroya has spent twelve years building insurance technology, including standing up a national insurance agency from scratch and learning the entire capital stack from distribution to underwriting to reinsurance.
In this new episode of DeFi Frontier, he explains why DeFi is the perfect architecture for reinsurance: smart contracts that pay out under specific conditions, cryptoeconomic assets staked against adverse events, transparent and verifiable capital flows. The analogy writes itself!
Re owns a regulated reinsurer that is the first client of its own protocol, with 51 active reinsurance treaties across the United States, along with $318M in premiums receivable, which are premiums owed to Re under active reinsurance contracts but not yet collected.
According to Karn, the bigger vision here is to be the Lloyd's of London for the internet capital markets, where thousands of reinsurers and insurance companies around the world can plug into the same programmable capital pool.
Re currently offers two ways to get exposure to reinsurance yields: reUSD and reUSDe. reUSD is their senior tranche at 6.2% APY and reUSDe is currently earning 12.3% APY as the mezzanine tranche. It’s key to understand Re protocol has an $80M junior tranche of its own to protect either of these tranches as first-loss capital.
Listen to the latest Edge Podcast to hear Karn walk through the full capital stack, how Re thinks about duration mismatch, and why this is a yield opportunity many of us DeFi investors have never considered, until now.
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🔗 Guest Links 🔗
► Re website: re.xyz
► Re on X: x.com/re
► Karn Saroya on X: x.com/karnsaroya
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