Fund Objectives
The Twelve Private ILS Offering exploits the traditional reinsurance market by investing in reinsurance contracts of various lines of business. The offering consists of transactions with attractive target returns of 15 - 20% in the entire non-life reinsurance market. It is intended to close at least five individual transactions which cover mutually exclusive exposures i.e. are non-correlated to each other. The returns of all transactions combined allow investors to fully collect their invested capital even after a full loss to one of the transactions.
The investment returns are driven by the performance of natural and man-made perils and are as such fundamentally independent from traditional financial markets’ returns. In addition, as the largest part of the transactions are non-US exposures, they can also be considered as an investment with strong diversification potential to existing ILS cat bond investments.
Investment Strategy
The transactions assume risk via the traditional reinsurance market. Credit risk is mitigated through the use of bankruptcy remote collateral structures and the assets held as collateral are invested in short dated government bonds or debt issued by supra-national debtors. Currency risk is very small as non USD denominated transactions are hedged into USD.
The investment selection is driven by high standards in underwriting discipline of the reinsured. Both, outstanding underwriting track record and current underwriters/modellers’ professional skills, are scrutinized in the due diligence process.
Due to the nature of the traditional reinsurance market, not all transactions will incept at the same time. However, the time to source all transactions is anticipated to be less than 12 months.
In the absence of any insurance events, the collateral of each transaction is released automatically after its maturity. The target final release date of all collateral is a maximum of two years since the inception of the first transaction.
In case of occurrence of an insured event, a prolonged collateral release period of 36 months could result. The loss free transactions would not be affected and the collateral of these transactions would be released after maturity of each transaction.
For more information on Twelve Capital investment funds, please contact our team.