Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Apollo said raising up to $5.5bn for insurance-linked fund strategies


Private equity and alternative investment specialist Apollo Global Management, LLC is reported to be out raising capital for a number of new investment funds, with as much as $5.5 billion said being raised for specific insurance-linked fund strategies.

Apollo Global Management logoAmong the funds being raised for is one strategy that will enable private capital investors to participate in transactions alongside Athene Holding Ltd., the life and retirement reinsurance firm that is majority owned by Apollo, according to a report from Bloomberg.

Apollo’s assets under management reached a huge $280 billion at the end of 2018 and with the new funds it is planning to launch and raise capital for it could add as much as another $9 billion across a range of strategies, including insurance-linked funds, real estate, aviation and credit.

The Apollo/Athene Dedicated Investment Program, a Cayman Islands registered structure, is perhaps of most interest to our readership of insurance and reinsurance sector investors and investment professionals.

According to Bloomberg’s report, Apollo is targeting up to a $4 billion capital raise for this new strategy which will enable third-party investors to participate in private deals alongside the managers insurance and reinsurance company Athene.

That could prove an attractive opportunity for investors, given the scale of Apollo, the size of the deals that Athene underwrites and invests in, and the potential to tap into the insurance-linked returns the company generates through its life, retirement and reinsurance focused business.

It’s could be considered a sidecar opportunity of sorts, except given the annuities focus of the firm it is unlikely to offer the same level of uncorrelation as a typical ILS sidecar strategy.

In addition, Apollo is reportedly raising up to $1.5 billion for the fourth generation of its Financial Credit Investment Fund, a strategy that allocates capital across privately structured credit related securities, including life settlements and other insurance-linked securities.

Apollo’s alternative credit platform has over $180 billion of assets and these credit drawdown products that have in the past been largely focused on life settlement opportunities that Apollo can generate, sometimes via transactions entered into by its Athene and Athora insurance and reinsurance vehicles.

While these strategies aren’t your typical insurance-linked securities (ILS) funds, they are attractive to investors for similar reasons, but also offer more private equity focused investors a chance to invest alongside Apollo in key strategies that have made the company significant profits over time.

The Apollo/Athene Dedicated Investment Program is particularly interesting, as it could offer a way for Apollo to bring additional private capital into Athene to fund new transactions, but enables investors to follow the fortunes of that underwriting platform, while also tapping Apollo’s investment prowess.

The fact Apollo is raising for such strategies now reflects the appetite for new investment opportunities among private capital providers, which could suggest increasing inflows into reinsurance related structures, as well as ILS funds, over time given investor appetite for new opportunities seems strong.

Of course Apollo also recently acquired Bermudian insurance and reinsurance firm Aspen, which could offer other ways for private capital to access insurance-linked returns in the future we’d imagine.


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