The pension fund of the BBC, or British Broadcasting Corporation, has made a fresh allocation to insurance-linked securities (ILS) in 2018, with a £98.1 million (approx. $127m) investment in an ILS fund managed by Securis Investment Partners.
The BBC Pension Trust had previously been invested in the ILS space, but exited back in 2015 when it pulled back on a mandate it had in place with ILS fund manager Nephila Capital.
That previous ILS mandate had been in place since late 2010 or early 2011, but then the BBC pulled back from ILS at a time when rates had been on a steep decline and so returns in the space as well.
It seems the pension fund kept its appreciation for the ILS and reinsurance linked investments space though and hence the fund had returned to the sector in 2018.
The BBC pension scheme has been allocating more capital to diversifying sources of return and alternative investments more generally, with the ILS mandate seemingly part of this strategy.
Pensions generally have been following this trend in recent months and years, particularly as many feel the equity markets has been overheating and hence now is the time to diversify and source out investments with lower correlation.
Which ILS and reinsurance linked investments can clearly provide, hence the allocation to Securis will meet these goals of diversification and adding uncorrelated return drivers to the BBC pension scheme portfolio.
The £98.1 million mandate to Securis only represents 0.6% of the BBC pension schemes total assets, which amounted to £16.6 billion at the end of the last financial year. So there is plenty of room for the pension to upsize the allocation should it choose.