Products & Services

We manage diversified portfolios of insurance-linked securities (ILS) as well as European hybrid insurance debt. Both strategies take advantage of our investment professionals’ profound understanding of insurance risks and insurance balance sheets as well as the regulatory environment. We offer clients access to insurance investment solutions through a variety of product structures, including institutional separate account mandates, specialist mutual fund and consultancy advice.

Insurance debt
The attractiveness of hybrid insurance debt stems from the changes implied by the regulation of Solvency II which is expected to become effective in 2013. The advent of Solvency II is likely to trigger a restructuring of currently outstanding debt instruments by European insurance companies as the majority of these subordinated bonds will not qualify for Tier 1 capital. We see this situation as a unique investment opportunity where investors will not only benefit from attractive yields on current issuances but also from the anticipated one-off adjustment when those instruments are called early.

Insurance-linked securities
Due to their low correlation with investment markets, ILS are an attractive diversifier for a portfolio comprising both traditional asset classes and non-traditional asset classes as they generate stable attractive risk-adjusted returns. This low correlation is driven by the fact that the underlying risk exposures (e.g. natural catastrophes) are not connected with capital markets. For example, the likelihood of wind storms is not influenced by the stock market.

While returns of ILS vary over time, their risk-adjusted returns have historically been superior to traditional asset classes. Noticeably, the spreads over the risk-free rate offered by ILS have been more appealing than those of similarly rated corporate and emerging market bonds.

A well-diversified ILS portfolio with investments in non-life risks such as natural catastrophes and motor insurance, and also life risks such as mortality, generates attractive and stable returns superior to fixed income investments with a similar risk profile.