Twelve Capital launches re/insurance equity investment fund

by Artemis on August 31, 2016

Insurance and reinsurance linked investment specialist Twelve Capital has announced the launch of its equity investment strategy, which further expands the asset managers vision of enabling investments across the insurance and reinsurance balance-sheet.

Twelve Capital already has successful insurance-linked securities (ILS), collateralised reinsurance and catastrophe bond funds, an insurance private debt investment strategy and a best ideas strategy, which invests across the insurance-linked assets.

Adding an equity investment strategy to its offering positions Twelve Capital uniquely among ILS, insurance and reinsurance linked investment managers, as the only manager offering direct returns from risk through ILS and cat bonds, as well as re/insurance debt and equity linked returns.

Returns from the insurance and reinsurance market have been seen as attractive by investors, both in their largely uncorrelated ILS form as well as through debt and equity. In the global financial crisis, re/insurers showed that they can withstand such turmoil better than many other financial market sectors, with their share prices not suffering to the same degree.

That makes insurance and reinsurance equities still attractive, despite the softening of the global reinsurance market, the increased competition posed by ILS funds and the general increase in competition from new business models and insurance technology (insurtech) start-ups.

With the experience of its team in selecting ILS transactions and private debt opportunities, Twelve Capital clearly has expertise than can also select shares of insurers or reinsurers with some degree of skill. Hence adding the equity strategy makes a lot of sense for the firm, as well as its end-investors.

The equity portfolios launched to date have a focus on M&A activity in the insurance sector, Twelve Capital said. The firm sees the launch as a “significant strategic milestone” which helps the firm advance its vision “to offer investors access to the attractive investment opportunities across the entire (re-)insurance balance sheet.”

Twelve Capital sees the equity strategy as a complement to its existing insurance-linked securities and insurance debt strategies, which have now been running successfully for a number of years (the debt strategy since November 2013).

Urs Ramseier, Managing Partner and CEO of Twelve Capital Group, commented on the launch; “Twelve was established with the aim of providing institutional investors access to the interesting investment opportunities across the insurance balance sheet. After ILS and Insurance Debt, equity was the missing piece which we have now been able to add to our offering.”

William Hardcastle, Director, and Strategy Head of Twelve Capital’s liquid equity strategy added: “Insurance equity offers compelling value with significant dividend yield attractions. The M&A focused strategy seeks to take advantage of material M&A premia in addition to already attractively priced securities. The multitude of factors driving M&A remain, including subdued organic growth opportunities, increased importance of scale, cheap financing and currency dislocations.”

The trifecta of direct risk and underwriting selection linked returns through ILS, insurance or reinsurance debt returns and now equity returns, will also make the firms best ideas strategy even more compelling, as the only investment strategy that truly seeks returns from across the entire re/insurance balance-sheet.

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