Track record & returns of ILS managers key to investors, says survey

ORIGINAL PUBLICATION HERE

Responses to a recent survey of investors in the insurance-linked securities (ILS) sector highlight the importance of track record and manager performance when selecting an alternative investment manager, although size and AuM are not deemed as important as you might think.

A recent survey that canvassed mostly asset managers, foundations/endowments and pensions funds, but also funds of funds and insurers that do currently, or could potentially allocate to the ILS market highlights the importance of track record when choosing an ILS manager.

Produced by Clear Path Analysis, results from the survey were published in a report, and shows that when selecting an ILS manager investors value track record and top quartile returns as the most important factors.

Korea Post Savings launches search for ILS fund manager

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Korea Post Savings, a South Korean government backed savings entity linked to the countries state-run postal service, has launched an RFP process to find an insurance-linked securities (ILS) manager to allocate funds to.

Korea Post Savings is one of the largest investment groups in South Korea, overseeing somewhere around US$90 billion of assets and is considered akin to a sovereign wealth fund. It manages savings for citizens of the country, with its Postal Insurance unit managing portfolios of equities, fixed income, hedge funds and other alternatives.

The investor has been diversifying its portfolio in recent years, shifting away from its traditional reliance on equities and bonds, moving into asset classes such as real estate, hedge funds and other alternatives.

Nuclear liability risks ILS deal transacted on a direct insurance basis

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Artemis understands from sources that a ground breaking insurance-linked security (ILS) transaction has been completed featuring nuclear plant liability risks that were transferred direct to an investor in a private cat bond-like format.

We’re told that the arrangement featured an ILS investor working directly with owners of nuclear power plants, entering into a risk transfer contract structured using a debt instrument to enable it to take on risks associated with nuclear incidents, across a number of plant locations.

The structure is really an ultimate net loss type trigger, we understand, with default of the debt investment, and so payouts, based on an event occurring at one of a number of nuclear power plant locations that causes liability to arise, or the default of the issuer.

Cat bonds an attractive asset for EU insurers in a Solvency II world

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Investing in catastrophe bonds is viewed as an attractive investment by some primary insurance companies, with the implementation of Solvency II meaning the assets can have certain capital benefits, depending on an insurers profile.

For a primary insurance firm which does not carry too much catastrophe risk on its balance-sheet, an investment in pure catastrophe risk can be seen as an attractive proposition, as under the Solvency II rules for capital requirements can mean that cat bonds do not attract a significant capital charge.

This isn’t true everywhere, of course. There have always been issues for German insurers that wanted to invest in catastrophe bonds and other insurance-linked securities (ILS), with the regulators taking a particularly conservative line here.

Insurance and reinsurance companies used to provide a significant portion of ILS capital, investing in assets which were deemed to help with the overall diversification of the balance-sheet, but in recent years that trend has slowed.

Public-Private Insurance Partnerships Bolster Latin American/Caribbean Resilience

ORIGINAL PUBLICATION BY AIDAN POPE OF GUY CARPENTER HERE

Globally, three of the ten most costly natural disaster events in the last 35 years occurred in total or in part in the Latin America/Caribbean (LAC) region (1); losses from Hurricane Matthew in the Caribbean are still being assessed.

Today, 80 percent of the LAC population lives in urban areas, second only to North America (82 percent) and well above the global average of 54 percent (2). The region’s 198 large cities (>200,000 residents) contribute over 60 percent of gross domestic product (GDP), and its ten largest cities produce 50 percent of that total. As the region’s population, swelling middle class, urbanization and GDP concentration continue to grow, the effects of climate volatility will likely increase the impact of natural perils losses on these economies.

Lutece Holdings Ltd. ILS fund vehicle to be launched by Erik Manning

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A new insurance-linked securities (ILS) and reinsurance linked investment fund vehicle, named Lutece Holdings Ltd., is being set up and prepared for launch by experienced ILS structuring and broking specialist Erik Manning, Artemis understands.

Lutece Holdings Ltd. is a Bermuda based holding company that we’re told will become the fund manager behind a new ILS venture, of which Erik Manning will be the CEO. No details are currently available about the strategy or vehicles that Lutece Holdings will use to access reinsurance and ILS business.

Manning had most recently been with reinsurance broker Aon Benfield, but we understand that he left the firm at the end of February 2017 in order to focus on getting Lutece Holdings ready for launch, where he will take the role of Chief Executive Officer (CEO).

ILS diversification offers real value to investors: Anger, GC Securities

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The diversification benefits of the insurance-linked securities (ILS) space offer real value to the asset classes growing investor base, says GC Securities’ Cory Anger.

Speaking to A.M. BestTV at the Artemis ILS NYC 2017 conference held recently in midtown Manhattan, U.S., Cory Anger, Managing Director and Head of ILS Structuring at GC Securities, highlighted the sector’s diversification benefits, favourable ILS pricing environment and continued investor appetite.

Diversification is one of the key attractions to the ILS space for the range and expanding base of institutional investors that allocate to the space, a notion highlighted by Anger when speaking with A.M. BestTV.

“Many of these investors are in this space for diversification purposes, it offers real value, it’s a growing asset class, it’s an asset class that doesn’t involve leverage, and that’s exciting for them,” said Anger.