Stone Ridge hits $7bn of ILS assets under management

Stone Ridge Asset Management’s mutual ILS funds experienced slower growth in terms of insurance-linked security (ILS) and reinsurance linked assets under management in the last quarter of record, but the manager has hit a new milestone as its ILS assets reached $7 billion.

This puts Stone Ridge Asset Management in fourth position in Artemis’ directory of ILS and reinsurance linked investment managers, which details investment professionals commanding $97.6 billion of insurance-linked assets. Recent growth also means the managers interval fund is likely the largest single ILS fund strategy in the marketplace at this time.

Stone Ridge’s ILS assets under management across its two dedicated mutual ILS fund strategies reached $7 billion as of April 30th 2018, but the manager only recorded growth in ILS assets of 4% during the quarter.

That’s a little slower than previous quarters, as Stone Ridge’s ILS assets had grown 10% to $6.72 billion by January 31st 2018, although not surprising given the February to April period does not feature as many significant capital deployment opportunities in reinsurance and ILS.

However, the manager has successfully grown its two ILS strategies by an impressive 23% in just one year, having only managed $5.7 billion of ILS assets at the end of April 2017.

Considering the impacts of the major hurricanes and catastrophes of 2017 and the fact Stone Ridge’s ILS and reinsurance portfolios were broadly exposed to this, it is impressive that the manager has continued to expand its assets, now standing 14% higher than they did at October 31st 2017, just after the losses.

This recovery is testament to the capital raising strategy and Stone Ridge’s ability to create broad market exposure for investors seeking a return from catastrophe and insurance risk.

As of April 30th 2018, Stone Ridge’s interval ILS fund structure, the Stone Ridge Reinsurance Risk Premium Interval Fund, had grown to a new high, growing 5% to reach $6.06 billion of ILS and reinsurance assets, up from $5.79 billion at the end of January 2018.

The Stone Ridge Reinsurance Risk Premium Interval Fund is likely the largest single ILS fund strategy in the marketplace now, as most other managers with similar levels of assets under management  are looking after those assets across more strategies than Stone Ridge is.

Meanwhile, the manager’s other dedicated ILS fund strategy has shrunk a bit further, as the Stone Ridge High Yield Reinsurance Risk Premium Fund fell in size to $924 million of ILS assets under management, down from $932 million at January 31st.

The majority of Stone Ridge’s additions to its ILS portfolios appear to be the manager taking advantage of the brisk catastrophe bond issuance in the first-half of this year.

But Stone Ridge also acquired chunks of Swiss Re’s Sector Re V sidecar, buying more than $150 million worth this year, twin $75 million allocations to Baldwin and Freeport segregated accounts of Horseshoe Re, and roughly $25 million allocated across accounts of Mt. Logan Re.

It looks as if the active catastrophe bond market has helped Stone Ridge to add more liquidity to its portfolio, in terms of investing across numerous of the securitised 144A new issues in recent months.

Stone Ridge Asset Management’s impressive growth in ILS assets continues. However it’s likely the managers ILS assets have grown considerably further at this time, given the $7 billion is only as of the end of April.

We’re told Stone Ridge’s capacity was a prominent feature at the mid-year renewals, which likely means the manager will have raised its ILS assets even further by this time of the year.

Not long until our Singapore conference, July 12th. Final tickets on sale here.