Schroder Life ILS strategy launches with $750m of capital

by Artemis on November 23, 2017

Asset manager Schroders has launched the Schroder Life ILS strategy today, a specialist $750 million fund that will be invested in life insurance and reinsurance linked securities (ILS), aiming to provide its investors with an attractive return from a diversifying asset class.

Schroders with the support of Secquaero Advisors Ltd. believes there is a growing opportunity for capital market investors to tap into life insurance and reinsurance linked returns, seeing a growing life ILS market with an increasing number of opportunities for investment.

The Schroder Life ILS strategy will be run across a number of funds and investment mandates, structured in closed-end vehicles with a 10-year maturity.

Impressively, the life ILS strategy launched with US$ 750 million of committed capital, a significant boost to Schroders overall ILS assets which it also invests in catastrophe bonds and other collateralized reinsurance products.

The Schroder Life ILS strategy has exposure to a full range of life and health insurance risks, mostly focused on investments in value-in-force (VIF) transactions, mortality risk, morbidity risk (health), and policy lapse risks.

Daniel Ineichen, Head of ILS at Schroder Investment Management (Switzerland) AG, will manage the new life ILS strategy at Schroders. The team at the Schroders ILS Desk will be supported by Secquaero Advisors Ltd, the firm’s exclusive advisor for origination, structuring and transaction monitoring of ILS investments.

Ineichen commented on the launch, “These new life specific strategies offer our clients a new class of insurance linked investments that provide attractive risk-adjusted returns that are both diversifying to traditional asset classes and to other more common ILS investments such as catastrophe risk. The longer durations and amortizing nature of many transactions provide our clients with assets that are well suited for matching long-term liabilities, such as pension liabilities.”

Scott Mitchell, Head of the Life ILS team at Secquaero Advisors Ltd, added, “The additional capacity from investors, combined with a fund structure that caters for the illiquidity and duration profile of complex life ILS transactions, means that Schroders is ideally positioned to support our transaction partners on strategically important structured life trades. The launch is particularly timely in the context of the evolving regulatory environment, which is driving an ever-increasing focus from insurers and reinsurers on active management of their risks, capital and liquidity.”

Dirk Lohmann, Chairman and CEO of Secquaero Advisors Ltd, also said, “The launch of Schroders’ life ILS strategy represents a significant step in extending Schroders’ overall ILS offering. The ILS team has been active in the life insurance market since the launch of our first ILS fund in 2008, contributing to the ongoing success of Schroders’ blended ILS (life and non-life) strategies. The team has also been involved in some of the most innovative structured life transactions in recent years. Through our strong industry relationships and longstanding experience we believe we have great access to private VIF deals and are able to source and structure a large variety of them.”

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