Amundi US Investment Management’s dedicated insurance-linked securities (ILS) mutual investment fund grew its net assets by another 7% in the last quarter of record, reaching $937 million at the end of January 2021.
That’s not quite back at the just under $1 billion high of total net assets that the Pioneer ILS Interval Fund had reported back in 2018, but the steady growth over recent quarters suggests that the strategy will soon eclipse that and may already have done by this stage, with the latest data only being to January 31st.
The Pioneer mutual ILS fund sat at at just under $793 million of total net assets at July 31st 2020, which was largely invested across insurance-linked securities (ILS), quota share reinsurance arrangements or sidecars and catastrophe bonds.
Now, as of January 31st 2021, the total net asset haul has grown to $937 million, a further 7% increase.
Also notable is the fact that the Pioneer ILS Interval Fund continues to narrow the gap between the cost and value of the insurance-linked securities (ILS) and reinsurance instruments it invests in.
With the losses of 2017 and 2018 having dented the valuations of many positions in the ILS fund, as was seen across the industry, Amundi US’ ILS investment team have been working through the development of losses, recovery of value and recognition of claims over recent quarters.
Now, with the total net assets pegged at $937 million, the current value of all the ILS instruments in the portfolio is cited as $904.4 million, while their cost is cited as $915.5 million.
That gap, between the valuation of the ILS assets invested in by the fund versus their cost is now the narrowest seen for a number of quarters, as the overall portfolio impacts of recent catastrophe loss years and also any impact from the pandemic, are now being put behind the investment portfolio.
As we explained the last time we reported on Amundi Pioneer’s ILS fund, the strategy delivered its investors an impressive 7.7% return for the full-year to October 31st 2020.
That was achieved through a year featuring a global pandemic and a record level of hurricane activity.
The strategy will now face some impacts from the US winter storms for its next quarter of record, but given the diversified strategy, across catastrophe bonds, reinsurance quota shares and other ILS instruments, the Amundi Pioneer ILS Interval Fund is likely to avoid too big an impact from that event as well, we’d imagine.
One final point, the Amundi Pioneer fund is a great example of the continuity that ILS investors and fund managers can provide to reinsurance and retrocession cedents or sponsors, with some of the transactions the investment manager allocates to now in fourth and fifth years.
This ability to allocate to repeat transactions over multiple years is crucial for cedents to gain comfort in ILS investors staying-power and willingness to continue delivering risk capital across multiple years and cycles, no matter the market conditions.