Twelve Capital to manage Falcon Private Bank ILS funds

Swiss based specialist insurance and reinsurance-linked investment manager Twelve Capital has agreed a transaction with Falcon Private Bank, a boutique Swiss weather manager, which will see Twelve Capital take on the management of the Falcon insurance-linked securities (ILS) business and investment funds.

The agreement will see ILS investment funds domiciled and regulated in Luxembourg and Switzerland, and any other Falcon ILS business such as managed accounts we assume, integrated along with the existing management team into Twelve Capital’s operations. Twelve Capital says that it will guarantee continuity for the existing Falcon Private Bank clients and will ensure that the Falcon ILS business is optimally integrated in Twelve Capital’s core business.

The parties have agreed not to comment on the details of this transaction, according to the press release. It appears likely that Twelve Capital have effectively bought the ILS business, along with the ongoing services of the management team, from Falcon, or perhaps that Falcon has outsourced its management directly to Twelve. The details are still subject to approval by the Luxembourg and Swiss authorities.

With the addition of the Falcon Private Bank ILS business and investment funds, Twelve Capital’s assets under management are boosted up to nearly $2 billion. Back in January the manager reported AuM of just over $1 billion, but we don’t believe the Falcon business amounted to nearly $1 billion suggesting that Twelve Capital had some strong inflows through the first half of 2013.

Of the $1 billion of assets that Twelve Capital reported in January around half is invested across insurance-linked securities, private ILS or reinsurance-linked contracts with remainder invested in the other insurance-linked asset class that Twelve Capital specialise in, hybrid insurance debt instruments. With the addition of the Falcon ILS business Twelve Capital is likely more concentrated in ILS as a result.

“We are delighted to have found an outstanding partner for our ILS business in Twelve Capital. The firm fully meets our expectations in terms of expertise, drive and tailored solutions. This solution offers our longstanding clients and our experienced fund management team continuity, innovation potential and interesting growth opportunities”, commented Eduardo Leemann, Chief Executive Officer of Falcon Private Bank.

Dr. Urs Ramseier, Chairman of the Board of Twelve Capital, said; “We are proud to play a part in the consolidation of the market for insurance-linked securities. We welcome the additional expertise from Falcon Private Bank within our team and are looking forward to a successful working relationship. We are confident that we will be able to further develop these investment funds in the best interests of the existing investors.”

The deal makes a lot of sense as Falcon Private Bank can perhaps focus on its core business of wealth management for private clients, referring them to Twelve Capital where they required access to ILS funds and investment opportunities. Twelve Capital is one of the larger ILS managers in Europe and highly regarded for its ability to model and transact private reinsurance contracts for its investment clients.