Longtail Re, the casualty reinsurance underwriting vehicle operated by asset manager Stone Ridge, has delivered a 20% annualised return-on-equity (ROE) since its inception in 2020, while also building a more than $6 billion asset portfolio, according to CEO Ross Stevens.In his latest letter to investors, Stone Ridge CEO Stevens explains that Longtail Re is growing fast and delivering attractive returns on its portfolio of casualty and longer-tailed underwriting, to the benefit of its third-party investor capital backers and the asset manager itself.Stone Ridge, through Longtail Re its Bermuda-based reinsurer, underwrites casualty linked opportunities, with a quota share focus in the main, but now also having expanded to legacy transactions this year as well.Longtail Re is very selective though and in his letter Stevens discloses that the reinsurer has only underwritten three legacy trades so far, despite having over 100 trade requests.

Recently, as we reported at the time, .Stone Ridge utilises private capital alongside its underwriting and investment acumen to provide large-scale solutions to the casualty and longer-tailed insurance and reinsurance market through Longtail Re.Stevens explains that legacy is a focus, but only selectively so for Longtail Re.

“Confirmation bias dooms the business model and, along the way, guillotine-level adverse selection hangs over every trade.When a one-off risk-transfer price is highly attractive for clear and imperative strategic reasons, hyper-selective, non-legacy-only investors can profitably escape with their heads, but at Stone Ridge we know half-priced sushi does not mean it’s a bargain.“A decade ago, there were about a dozen dedicated legacy firms and funds.

Today, one large player remains, though recently its credibility detonated after initiating litigation against a client.The other remaining legacy-only firms are subscale or regionally focused.Enter Longtail Re,” Stevens wrote.

First and foremost, Longtail Re has been designed to “partner, not compete with the world’s best underwriters to generate a portfolio of hyper-diversified casualty liabilities that deliver low-cost float,” Stevens explained.Secondly, Longtail Re is designed to, “invest that float in proprietary and valuable Stone Ridge-generated fixed income assets with superior risk-adjusted expected return.” Longtail Re now ends 2025 with more than $6 billion in assets, of which around one-third are from legacy deals.On those legacy deals, selectively chosen remember, Stevens says the Stone Ridge term for them is not loss portfolio transfers (LPT), rather it is WPT, or “Waiting Portfolio Treasure.” 18 months ago zero of Longtail Re’s assets were from WPT, or legacy style reinsurance deals, Stevens explained.

He goes on to explain the development of an attractive track-record at Longtail Re, writing, “Most important, Longtail has delivered 20% annualized ROE since inception in 2020, 16% / year higher than the average of the top three global reinsurers, our aspirational peer group in the decades ahead.” He notes that industry research suggests around $1 trillion of so-termed WPT may be out there, buried on old reinsurance balance sheets.But writes, “Our Bayesian training tells us about 97 out of 100 legacy treasure hunts would be for fool’s gold, but also that about $30 billion of real treasure awaits.I’m betting on Longtail’s Bayesian treasure hunters to find it.” Which drives home the selective approach Stone Ridge is taking with Longtail Re, to find only the legacy style reinsurance transactions that can deliver the returns it seeks for investors, and the investment float it believes is set to be reliably sticky for its strategies.

Stevens does not comment on the catastrophe reinsurance side in this year’s annual letter.But remember that his firm remains a significant player in insurance-linked securities (ILS) investments and catastrophe bonds, through its mutual and private ILS funds.He does reveal that, as a firm, Stone Ridge again made $3 billion in trading profits in 2025, with its uncorrelated strategies focus, now $10 billion in the last three.

Stone Ridge remains a key and growing player in global reinsurance, with its differentiated and third-party capital supported approach to selectively partnering with the underwriting companies it believes can deliver the returns sought and for Longtail Re assets, that continue to drive the engine of the company.All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.