Deutsche Asset & Wealth Management updates on ILS fund

by Artemis on July 15, 2015

Deutsche Asset & Wealth Management has updated on the launch of its insurance-linked securities (ILS) fund management unit, which began operating earlier this year with seed money from alternative investment manager Tages Capital.

The Deutsche Asset & Wealth Management ILS fund has been in the works for some time, having been initially reported as near to launch two years ago. The Deutsche AWM ILS team made its first investments in collateralised deals earlier this year.

The unit, which is an investment management division of the Deutsche Bank Group with EUR 1.16 trillion of assets under management, announced yesterday that it has entered the insurance-linked securities (ILS) market to provide its clients with access to the ILS and reinsurance linked asset class.

Deutsche Asset & Wealth Management intends to provide investor clients with a range of products in the ILS asset class. It’s ILS strategies will not purely focus on catastrophe risks. The firm intends to target property and casualty risks, as well as mortality and longevity risk investments.

The ILS team at Deutsche AWM is led by Roger Douglas and Michael Amori. Amori previously headed up longevity risk transfer group at Deutsche Bank, where he led teams involved in a number of billion dollar longevity swap transactions. The wider team has ILS experience, capital markets expertise, as well as reinsurance underwriting and broking skills.

Currently the Deutsche AWM ILS team has around $100m of insurance-linked assets under management, Artemis understands, with the majority deployed into private ILS transactions across both non-life and life risks.

The Deutsche AWM ILS fund is said to be underweight catastrophe bonds, compared to the broader ILS fund industry, as it finds private ILS better for diversification and offering a wider choice of counterparties and structural features such as triggers attachment levels.

An initial launch ILS strategy was seeded by specialist alternative asset class multi-manager business Tages Capital, which has approximately $2.4 billion of assets under management.

Tarun Nagpal, Head of Alternatives & Fund Solutions at Deutsche Asset & Wealth Management, commented; “We are delighted to partner with Tages Capital in an important growth market for us. Insurance Linked Securities offer historically low correlation to other asset classes with the potential for stable returns and reduced risk as part of a diversified portfolio.”

Mark de Klerk, Head of Seeding Strategies at Tages Capital, added; “We believe that there is strong demand for alternative solutions which have the potential to provide attractive returns which have historically exhibited low correlation to other asset classes, in particular those solutions that help insurance companies manage their capital constraints in the face of regulatory changes.

“We are excited to partner with the experienced team at Deutsche Bank who we believe are well positioned to deliver these solutions via exposure to the Insurance Linked Securities market within the institutional framework of a large and well respected bank platform.”

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