Another independent UK asset manager grows allocation to catastrophe reinsurance

by Artemis on March 28, 2013

Another of the UK’s independent asset managers has followed a trend which is emerging where some independent investment houses increase their allocations to reinsurance and catastrophe risk through some of the ILS and reinsurance funds we cover here on Artemis. This time around the asset manager in question is Premier Fund Managers, a UK investment manager offering a range of fund based investments to private clients and professional advisers.

Premier Fund Managers clearly has an appetite for reinsurance as an asset class right now and must have an appreciation for the returns that the asset class can offer to its clients as well as the low-correlation that catastrophe risk has with the wider financial markets. In recent weeks Premier Fund Managers has been increasing its allocation to the Dexion Capital managed DCG Iris ILS and catastrophe bond investment fund, growing its holdings in DCG Iris from around 3.5m shares at the start of March to now over 4.3m shares as of the 26th March.

Premier Fund Managers stake in the DCG Iris ILS fund equates to 8.42% of the issued share capital of the fund and gives Premier an equivalent percentage of the voting rights. It’s holding in DCG Iris will be worth over £4.3m at todays latest share prices.

DCG Iris is not the only reinsurance and catastrophe risk allocation that Premier Fund Managers has made. It also has an allocation to the CATCo Reinsurance Opportunities Fund within each of the Premier multi-asset series of funds alternative investment segments.

It’s good to see the reinsurance and catastrophe risk linked asset class being increasingly allocated to by asset managers such as Premier Fund Managers as it shows an increasing acceptance of the risks posed and understanding of the benefits on offer among these independent managers.

Premier Fund Managers are not the first to up its allocations to reinsurance and catastrophe risk. A number of asset managers, including Cazenove Capital Management, hold allocations to CATCo. UK-based investment manager Baillie Gifford took up 10% of the Blue Capital Global Reinsurance Fund at its launch and also invested in CATCo at its launch as well. Another UK investment manager, F&C Asset Management also has a considerable allocation to Blue Capital.

As these independent asset managers grow their allocations to reinsurance and catastrophe risk it is allowing retail investors to begin to appreciate an exposure to the asset class as well. The types of fund offerings that the likes of Premier, Cazenove and Baillie Gifford offer to their clients can be invested in on a relatively small-scale, making the return of the reinsurance market and catastrophe risk now accessible to almost anyone.

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