Oppenheimer expands ILS offering with new ILS Interval Fund launch

by Artemis on June 14, 2018

Asset manager Oppenheimer is expanding its insurance-linked securities (ILS) and reinsurance linked investment offering with the launch of its first strategy that invests across the ILS instrument spectrum, beyond just catastrophe bonds, an interval mutual fund structure named the Oppenheimer ILS Interval Fund.

Oppenheimer has been running catastrophe bond portfolios (which we also covered this week) for a number of years now, primarily the OFI Global Cat Bond Strategy and the Oppenheimer Master Event-Linked Bond Fund, LLC, which is a subset of the Global portfolio.

The investment manager has been looking to expand its activities in ILS for some time as well, seeking to add expertise to its team that would enable it to invest in a broader range of ILS and reinsurance linked assets, which seems now to be bearing fruit with the launch of this Oppenheimer ILS Interval Fund.

The Oppenheimer ILS Interval Fund is a brand new strategy, with the fund registered with the SEC as a 1940’s Act mutual fund arranged in an interval structure only this week and an initial offering now planned.

The investment manager seeks to target long-term investors with the Oppenheimer ILS Interval Fund, with liquidity afforded by quarterly repurchases of up to 25% of the funds outstanding shares.

This is typical of the ILS interval mutual funds launched to-date, with all opting for quarterly repurchase schedules in order to reduce the chances of a run on liquidity should major catastrophes strike.

As a result, Oppenheimer says that potential investors in its ILS Interval Fund should consider the strategy one with limited liquidity.

OFI Global Asset Management, Inc. will be the fund’s investment adviser, while parent OppenheimerFunds, Inc. will act as sub-adviser.

The portfolio managers, who have not been disclosed yet, will look to invest at least 80% of the funds assets into ILS and reinsurance assets at any one time, across a broad range of instruments.

The strategy will be the first at Oppenheimer that can invest across the gamut of ILS and reinsurance linked assets, to include, catastrophe bonds, preferred shares in special purpose insurers and the like, reinsurance sidecars, collateralized reinsurance contracts and industry loss warranties (ILW’s).

Quota shares will also be an investment class, including excess-of-loss, stop-loss and other non-proportional reinsurance arrangements that are fully-collateralized.

The new Oppenheimer ILS Interval Fund will be distributed through Oppenheimer networks and registered investment advisers, as is typical of the other interval ILS strategies available today.

Largely this will be private capital from largely higher net worth investors, we assume, with three classes of shares offered for different investor types and with differing expense levels.

The interval mutual fund structure is becoming an increasingly attractive vehicle for investment managers looking to offer their clients and ILS or reinsurance linked strategy and Oppenheimer will no doubt be able to use this to complement its catastrophe bond funds, while expanding its overall ILS assets under management.

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ILS Asia 2018

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