Leadenhall unveils new life fund, passes $1 billion assets under management

by Artemis on March 14, 2013

A third ILS fund has been unveiled to us by London based insurance-linked securities and reinsurance-linked investment manager Leadenhall Capital Partners today. Leadenhall Capital has been experiencing strong growth of its assets under management and identified an opportunity to launch a third fund, but this time focusing on life insurance linked investments to provide a new offering to existing and new investment clients.

Leadenhall Capital already has two established funds which are listed on the Irish Stock Exchange in the Leadenhall Value Insurance Linked Investments Fund PLC  investing solely in non-life and Leadenhall Diversified Insurance Linked Investments Fund PLC investing in non-life and up to 20% in life insurance linked opportunities, excluding longevity and life settlements. It added a third, life focused fund to its roster in September 2012 but has been quiet on its progress until now. The latest addition to the Leadenhall funds roster is an open-ended fund targeting life opportunities, but excluding longevity and life settlements, called the Leadenhall Life Insurance Linked Investments Fund PLC which is also Ireland based.

The new life fund offers investors a way to gain access to the risk and return profile of the life insurance and reinsurance sector. Dan Knipe, Life Portfolio Manager at Leadenhall, told us; “The Fund is established in Ireland with a focus on mortality risk and the strategy explicitly excludes both longevity risk and life settlements. To date the portfolio has mainly invested in public mortality securities but we also see exciting and attractive opportunities in private markets.”

We asked Knipe how investors had responded to the life fund and how fund-raising for it had progressed, to which he commented; “We launched the Fund in September 2012 and have grown it from around $35m at launch to its current size of $140m while maintaining the performance within the target return of cash plus 3% to 4%, after fees, over that period.”

Knipe continued; “Investors realise that appetite for longevity risk from the (re)insurance community is in part driven by an offset between mortality risk and longevity risk. In addition to the diversification benefits provided to an investor’s portfolio by mortality assets, the opportunity to take mortality risk as a directionally opposite exposure to their longevity risk is of particular interest to pension schemes.”

With the help of this new fund as well as with the growth of its existing funds and managed account investors Leadenhall also told us that it has passed the $1 billion assets under management mark for the first time split between its three open-ended ILS funds and managed accounts it maintains for clients.

Leadenhall has experienced strong growth thanks to inflows of capital from new and existing investors over the last twelve months. Back in May 2012 Leadenhall cleared the $650m mark for the first time but by December it had grown to over $850m of assets under management. Now having cleared $1 billion, Leadenhall is among the largest ILS fund managers.

Luca Albertini, CEO of Leadenhall Capital Partners, told us that the firm aims for continued growth; “Leadenhall passed USD 1 bn AUM with commitments in March and currently expects additional commitments from a wide range of investors in its life and non-life strategies in the 2nd quarter of this year.”

Commenting on how the investments Leadenhall make in insurance and reinsurance instruments and contracts are split, Albertini said; “The firm’s AUM are roughly 50% in life and mortality assets (Leadenhall does not invest in longevity risk) and 50% in non-life opportunities.”

Specialist insurance and reinsurance underwriting group Amlin has an interest in Leadenhall Capital Partners and just two days ago we wrote that it intends to seek ways to leverage its reinsurance underwriting alongside the third-party capital management abilities of the Leadenhall team to grow its returns. Luca Albertini sees this joint venture as a positive selling point to investors, and commented; “Investors value our track record, our team and the potential offered to them by our JV with Amlin, an established blue chip player in the reinsurance industry with main operations at Lloyd’s of London, Zurich, Continental Europe, and Bermuda.”

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