Twelve Capital offers a range of investment strategies that capture insurance investment opportunities across different asset classes.
Twelve recognised that bank deleveraging in the wake of the 2008 financial crisis and the introduction of the Solvency II regulatory regime in Europe would create investment opportunities. As a result of our continued focus in this area, Twelve manages a range of Insurance Bond funds and tailor-made mandates.
Analysis of the fundamental value of insurance companies as well as the legal terms and the price of each debt instrument is undertaken. Evaluation of the risk-return profile of each issue is carried out with an emphasis on comparative value among issues.
Twelve anticipated the growing need for solvency capital among smaller insurance companies, especially in Europe and now manages a growing number of Private Debt portfolios, including several tailor-made mandates.
The Firm applies a fundamentally driven bottom-up strategy, finding and providing debt financing to creditworthy companies with strong balance sheets. This can be attained through self-arranged and bank-structured transactions not exceeding EUR 100m. The transactions have an attractive illiquidity premium and offer considerable scope for portfolio diversification.
We manage a range of Cat Bond mutual funds and also tailor mandates to the specific risk budgets and return objectives of institutional clients. Historically, Cat Bonds have shown low correlation to traditional financial markets and alternative asset classes.
We invest mostly in Cat Bonds and in some private Cat Bonds that we structure in-house. We rate the legal, qualitative and quantitative aspects of each bond, and we use a relative pricing methodology to identify attractive opportunities.
Our Private ILS strategy invests in private reinsurance transactions covering natural catastrophes and an expanding range of non-natural perils such as aviation, marine, and terrorism events. We launched our Private ILS strategy in 2010, and now manage several tailor-made mandates for institutional clients as well as funds. Historically, Private ILS investments have shown minimal correlation to traditional financial markets and alternative asset classes.
We source and perform in-depth quantitative and legal analysis on a diverse range of Private ILS transactions. We are able to construct high-conviction, diversified portfolios in line with allocation limits and liquidity terms.
Twelve manages portfolios of global listed insurance equities with the objective of achieving returns in excess of the global insurance equity benchmark. Key areas of focus include; dividend yield, quality, M&A, seasonality.
Twelve recognises recent M&A activity, with deals exceeding an aggregate USD 100bn in value during 2015. A multitude of factors drive our view that this is set to continue, including: industry overcapacity, cost pressures, technological change, scale advantages, a challenging operating environment for some insurers and the availability of low cost financing to name but a few.
The investment process is both a top-down and bottom-up approach, with ongoing risk management.
Our more liquid Best Ideas portfolios comprise Insurance Bonds, Cat Bonds and, potentially, listed Insurance Equity. Comingled portfolios have additional scope to exploit illiquidity premiums through Private Debt and Private ILS transactions. All these portfolios aim to harness the favourable performance characteristics of the underlying strategies they include.
We use a fundamentally driven bottom-up approach to identify what we believe are the most attractive insurance transactions and securities. We apply a relative valuation process to compare the risk-return potential of different investment opportunities and select the highest conviction ideas. We are able to construct and adjust portfolios after stress testing them and analysing the correlations between the constituent investments.