Swiss Re Insurance-Linked Fund Management

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Aeolus Capital Management AUM hits $3.9bn on mid-year capital raise


Aeolus Capital Management Ltd., the Bermuda based reinsurance and insurance-linked securities (ILS) investment fund manager, has been the beneficiary of fresh investor client inflows in advance of the mid-year renewals, we understand, taking its overall assets under management (AUM) to $3.9 billion.

aeolus-capital-management-logoAeolus is just the latest manager of collateralized reinsurance and retrocessional assets to have benefited from new investor capital flowing to its fund strategies this year.

As reinsurance and retrocession rates have risen in the hard market environment and ILS investment managers have demonstrated the changes they have made through the last few years to improve their portfolios, confidence is returning and investors are increasingly allocating positive flows to fund stategies.

A year earlier, at the mid-point of 2022, Aeolus Capital Management’s AUM had been around the $3.5 billion mark.

Now, the managers AUM has risen by more than 11% over one year to reach $3.9 billion, which sees Aeolus well on the way back towards its previous high which was around the $4 billion mark back in 2018.

The increase keeps Aeolus Capital Management firmly within the top-10 of our ILS fund manager directory.

It’s another encouraging sign for the overall insurance-linked securities (ILS) market, as investors put their support behind collateralized strategies investing into peak natural catastrophe risks.

Aeolus is a specialist on the private or collateralized reinsurance and retrocession side of the market, which had been an area hard hit by the frequency and severity of catastrophe events through recent years.

But now, with higher pricing that appears more risk commensurate, as the reinsurance market overall has hardened, and an improved portfolio construction thanks to much better terms and conditions, including higher attachment points, strategies like Aeolus’ that target returns towards the mid to higher end of what ILS strategies tend to look for, are now coming under increasing investor attention.

Recall, that we reported back in 2022 about some of the product restructuring and repositioning that had been going on at Aeolus Capital Management, as it looked to improve the terms of its contracts and better shape the potential portfolio returns for its investors.

Moves like that are now benefiting ILS fund managers, as they start to be able to evidence some of the product and portfolio improvements they’ve been making, as well as the higher return potential of their funds in 2023.

Helping this is also the type of investors showing increasing interest in ILS strategies, as many endowments, foundations and family office type investors are looking for higher returns than the catastrophe bond market can offer, so turning to the more private and collateralized ILS fund strategies.

At Artemis, we are seeing the most interest in ILS as an asset class, from these types of investors, in at least a decade and it’s clear that interest is resulting in positive flows for ILS investment managers as well.

The return to asset growth for many ILS fund managers in 2023 is a very positive sign, although investors will be keen to see that positive inflows do not turn into any significant softening of pricing going forwards.

View information on many dedicated ILS fund managers, as well as reinsurers offering ILS style investment opportunities, in our Insurance-Linked Securities Investment Managers & Funds Directory.

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All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

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