Stone Ridge ILS & reinsurance assets hit $3.713 billion, up 13%

by Artemis on September 30, 2015

New York based Stone Ridge Asset Management, the beta and alternative risk focused mutual fund manager, has again grown its insurance-linked securities (ILS) and reinsurance linked assets under management, now hitting $3.713 billion, up 13% between May and the end of July.

Stone Ridge continues to demonstrate that its strategy of offering ILS and reinsurance linked investment opportunities, in 40’s Act compliant mutual fund format to investors through a network of registered investment advisors (RIA’s), is paying off.

In terms of growth, Stone Ridge is among the fastest growing investment manager in the ILS space currently. At a time when many ILS fund managers have reduced growth, in fact some have been returning a little capital, Stone Ridge continues to grow steadily.

Hence, Stone Ridge is successfully sourcing new deal-flow, both gaining access to all the latest catastrophe bond transactions, as well as a wide range of collateralized reinsurance sidecars, quota shares and other private ILS deals.

Stone Ridge launched in late 2012 with assets of around $350m in two funds, the Stone Ridge Reinsurance Risk Premium Fund and Stone Ridge High Yield Reinsurance Risk Premium Fund.

The manager then grew its ILS and reinsurance linked assets to $766m by July 2013, then to $1.4 billion by January 2014 with the help of the launch of the Stone Ridge Reinsurance Risk Premium Interval Fund, then again to $1.8 billion by the end of April, then $2.03 billion at July 31st followed by another leap to $2.124 billion at the 31st October, then up another 42% reaching $3.006 billion at the 31st January 2015.

Across the three ILS and reinsurance focused Stone Ridge fund strategies the total assets then grew 9.4% to $3.288 billion as at the 30th April 2015, and now at the latest reporting interval, Stone Ridge’s ILS fund assets have now reached an impressive $3.713 billion at 31st July 2015, up approximately 13% or $425m.

The pace remains slower than seen through 2014, but still steady and compared to many other ILS fund managers the continued growth is impressive in the current market.

All three of the dedicated ILS fund strategies managed by Stone Ridge have grown again, but the Interval ILS fund continues to show its popularity, outstripping the other two funds.

The Stone Ridge Reinsurance Risk Premium Fund, the lowest risk of the managers’ ILS strategies, had total net assets of $982.642m at 30th April 2015. It has now grown by almost 3% to pass the billion mark at nearly $1.01 billion.

The Stone Ridge High Yield Reinsurance Risk Premium Fund, a higher risk and return strategy, had assets totaling $413.79m at the 30th April. This fund has now reached $484.2m, an impressive increase of 17%. That suggests Stone Ridge found new higher yielding opportunities at the mid-year renewals, likely due to the continued growth of private ILS and collateralized reinsurance.

Finally, the Stone Ridge Reinsurance Risk Premium Interval Fund, taking the interval fund approach of offering staggered liquidity opportunities to investors, enabling it to invest in less liquid assets, sat at $1.892 billion at the 30th April 2015.

The Stone Ridge ILS Interval fund has now jumped by over 17%, reaching just under a very impressive $2.22 billion of total assets under management.

Once again, a depreciation in the value of some catastrophe bonds can be seen in the latest Stone Ridge funds report, but this will likely be recouped over the peak months of the U.S. wind season, as had been seen to be occurring in August in the secondary cat bond market.

The mix of assets has not changed considerably, but the portfolio disclosure shows a wide range of new private ILS and collateralized quota share deals invested in. As usual the typical sidecar names are still there, along with a number of investments in private ILS funds managed by Aeolus.

As ever the report from Stone Ridge provides an interesting insight into the private ILS transaction world, listing many of the managers positions in segregated account collateralized reinsurance deals and private quota shares.

With now $3.713 billion of ILS and reinsurance assets managed across its three ILS mutual funds, Stone Ridge Asset Management remains firmly in the top ten ILS fund managers, by assets managed, in our Insurance Linked Securities Investment Managers & Funds Directory.

The charts below break down the asset allocation for each of the three Stone Ridge reinsurance mutual funds as at the 31st July 2015 (compare this breakdown to our previous report here):

Stone Ridge Reinsurance Risk Premium Fund

Stone Ridge Reinsurance Risk Premium Fund breakdown by type of assets managed - As at 31st July 2015

Stone Ridge High Yield Reinsurance Risk Premium Fund

Stone Ridge High Yield Reinsurance Risk Premium Fund breakdown by type of assets managed - As at 31st July 2015

Stone Ridge Reinsurance Risk Premium Interval Fund

Stone Ridge Reinsurance Risk Premium Interval Fund breakdown by type of assets managed - As at 31st July 2015

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