Bringing the third-party investor capital that it manages closer to the customer, the source of insurance or reinsurance risk, helps specialist ILS investments manager Securis Investment Partners enhance its returns, according to CEO Rob Procter.
Speaking to Artemis in a pre-Monte Carlo Reinsurance Rendezvous 2016 interview, Procter explained that the expansion of the Securis Investment platform into the Lloyd’s of London market and the U.S. excess and surplus lines space, is ultimately good for its end-investors.
Telling us a little about the expansion of the Securis strategy and platform, Procter explained; “It is our belief that, in order to continue to meet our investors’ needs into the future, we need to be efficient, better organized than our peers and innovative.”
One of the ways Securis aims to stay ahead of the pack is through its expertise; with a growing team now one of the largest in the ILS fund manager market.
“Our principal strength is our team – at 48, larger than many of our peers and spread across our platforms in London and Bermuda – affording us strong access to risks, and allowing us to be highly selective in portfolio construction,” Procter said.
The expansion of expertise has also been targeted to support the expanding underwriting and investments platform at Securis, with expertise hired specifically to help the ILS manager expand into Lloyd’s and U.S. insurance and reinsurance business.
Procter sees this as driven by a desire to be innovative in the ILS market; “Innovation is key. Just one example of this is our Lloyd’s and specialty business, and the launch this year of our own Special Purpose Syndicate, SPS 6129 – which has been welcomed by investors, albeit those who are at the more sophisticated end of the spectrum.”
“The entity largely supports insurance risks originated in the US “excess and surplus” lines market,” Procter continued, adding that it is through this expansion that efficiency can be gained ultimately to the benefit of the firms investor-base, “By moving closer to the end customer, we eliminate certain frictional costs – with the aim, again, of enhancing returns for investors.”
2016 to-date Securis has now grown its insurance and reinsurance-linked assets under management to an impressive $3.8 billion, which Procter sees as progressive growth but not rushed.
“We always put profitability before volume, it is our mission to ensure our investors receive superior risk-adjusted returns,” he explained, noting that it is vital to have the platform to be able to deploy new capital as it is raised.
Looking ahead for the ILS market, Procter expects to see ongoing, steady sector growth; “We believe the ILS market will continue to grow – both in absolute terms, and overall share of the market terms. The traditional equity-capitalized reinsurance model is seeing no letup in pressure – from a combination of lower rates, in many cases bloated expenses, poor asset-side investment returns, and exhausted prior year reserve releases. Well-organized ILS firms that are lean, nimble and innovative stand to benefit.”
For Securis, the game-plan is to move forwards much as the ILS manager has ever done, Procter explained; “We will continue to go about our business as we have always done at Securis – using a detailed and methodical approach to analytics and portfolio construction, in conjunction with the strong bench of risk origination.”
With the key January 2017 reinsurance renewals in mind, Procter hopes for another display of increasing price discipline, reflecting the improved conditions seen in June/July 2016.
“Looking at the most recent renewal periods, and with January 2017 in mind, we are hopeful that there is a more disciplined approach to capital deployment pervading the market more generally, irrespective of any loss activity between now and year-end,” he said.
But there is always pressure to offer more at lower prices, or expand terms, but that’s not in Securis or its investors interests, Procter went on.
“In a softer market, buyers of protection will always push for more – lower price, more expansive coverage, fewer exclusions and so on,” he commented. “But that’s why we are here – on behalf of our investors, to negotiate and push back as much as possible.”
Thanks to Rob Procter for his time and his insight into Securis Investment Partners.
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