LGT grows assets by $400m with three pension fund ILS mandates

Swiss based insurance-linked securities (ILS) and reinsurance-linked investment manager LGT Insurance-Linked Strategies has added another $400m of assets by winning ILS investment mandates from three major European pension funds. It’s now a year since LGT acquired the ILS business from Clariden Leu and the team has grown its assets under management by 30% in that time.

The LGT ILS team has won three substantial new mandates from large European based pension funds this year, totalling over $400m in assets to be invested in ILS and reinsurance. The three new mandates are structured as separate, regulated funds which sit on LGT’s dedicated ILS fund management platform in Luxembourg and each will focus on private insurance-linked investments, or collateralised reinsurance.

The institutions which have allocated the $400m of capital to LGT for ILS investment include one of the largest Dutch pension fund managers, whose mandate is to invest in non-U.S. risks only, the AXA Winterthur pension fund and the pension plan of a Swiss municipality, both of whose mandates are to invest in worldwide risks.

All three of the new mandates will have primary allocations to collateralized reinsurance through privately transacted deals. Each will also have a secondary allocation to insurance-linked securities and catastrophe bonds, which LGT says will allow them to take advantage of attractive market opportunities and to manage liquidity needs.

The LGT ILS team has experienced strong growth in the last year, since the business was acquired from Clariden Leu. The amount of assets under management at LGT Insurance-Linked Strategies has grown by 30% over the course of the first year since the acquisition. LGT says that it now manages more than $3 billion of insurance-linked assets, making it one of the largest managers in the ILS and reinsurance-linked asset class.

LGT said that it attributes this strong growth to the teams proven track record in managing portfolios of insurance and reinsurance-linked assets, as well as to the reputation and stability of LGT’s investment management platform.

Steven Kaufmann, who is leading the insurance-linked investments allocation at AXA Winterthur Pension Fund, commented; “We have followed the ILS space for a long time and have been convinced by the uncorrelated returns in the insurance-linked investments sector, as well as the long track record, transparency, and high quality of the LGT team, especially regarding collateralised reinsurance.”

Michael Stahel, Partner and Portfolio Manager of LGT ILS, added; “We are extremely pleased that AXA Winterthur selected us for its allocation to this exciting asset class, which will help to further diversify their asset base.”

To learn more about LGT Insurance-Linked Strategies, read our interview from March with Michael Stahel, one of the four partners/portfolio managers in the LGT ILS team.