Specialist Zurich-based insurance linked investment manager Twelve Capital has announced a temporary closure of the firms insurance private debt investment strategy due to high demand from clients resulting in $400m of inflows since November.
Twelve Capital, which specialises in insurance linked securities and catastrophe bond investment management primarily, branched out into insurance private debt with the launch of a new strategy in November 2013. Twelve Capital saw an opportunity to provide small and medium insurers with a new source of regulatory capital and with expertise already in-house launched its strategy which seems to have been very successful.
Twelve Capital said today that it’s Insurance Private Debt strategy has raised $400m of inflows from investors since launching it in November. In the best interest of its existing investors Twelve Capital has chosen to close the strategy to further investments starting with effect as of 30 May 2014 and ending on 31 December 2014. During this time the manager said that redemptions and other investment procedures will continue to operate as normal, including subscriptions which accepted prior to the closure or mandates under current negotiation.
Dr. Urs Ramseier, Chairman of Twelve Capital, said; “We are very happy about the success of our Insurance Private Debt strategy and want to thank everyone who has invested in it. Our priority is always to act in the best interest of all our clients. For this reason we have decided to opt for a temporary closure. During this suspension period we want to concentrate on protecting and making the existing assets perform to the best of our ability.”
Twelve Capital was the first insurance linked investment manager to launch a dedicated private debt strategy, but we suspect that elements of private debt may become an increasing feature in the same pools of capital which support ILS. Small insurers and reinsurers are increasingly in need of funding and ILS managers are well-positioned to provide that, acting almost like venture capital for the insurance and reinsurance space.
ILS investors may appreciate the slightly different risk and return profile that insurance debt can offer as well, which is highly complementary to a pure catastrophe risk strategy. It also provides a way for investors to gain exposure to the returns of reinsurance business in other lines and segments of the market in a very efficient way.
Given the strong interest in ILS and other insurance linked investors from the capital markets it is no surprise that Twelve Capital has experienced high demand for this strategy. We expect to see other innovative strategies to tap into investor capital emerge from ILS managers in the future.