South Carolina Retirement System looks to add ILS asset class

The South Carolina Retirement System Investment Commission will look to add an allocation to the insurance and reinsurance linked (ILS) asset class as it makes significant changes to its portfolio mix and targets more complex and diversifying investments.

According to Pensions & Investments magazine, the Commission discussed changes to the $28.2 billion South Carolina Retirement Systems asset allocation mix at a board meeting yesterday. The System manages assets on behalf of public employee pension funds for the state and is seeking to become more diversified and to target newer opportunities, such as ILS.

The ILS allocation will be made within an “other opportunistic” investment bracket, which will also see the pension fund asset manager allocate to other “complex” asset classes. The “other opportunistic” bracket will have 2% of assets allocated to it, which amounts to roughly $560m.

The total shift in asset allocation is expected to take three years, according to the Commission, but with ILS it could perhaps be more rapid. The search for managers to allocate capital to is the next step for the Commission, so ILS fund managers will likely see RFP’s emerging from South Carolina.

As large pension fund managers such as the South Carolina Retirement System become aware of and gain an appreciation of the ILS and reinsurance linked asset class it will result in increasing demand for manager services and more capital inflow into the sector.

Hence creating the opportunities for deploying capital is becoming increasingly key, in order to ensure these large investors that are new to the ILS sector can put their capital to work effectively.