There is increasing acknowledgement of the opportunity that Asian investors present to insurance-linked securities (ILS) fund managers and the market as a whole. To date, the contribution of Asian investors to the overall ILS and catastrophe bond investment market remains small, with around 5% of the total ILS market capital coming from investors in Asia. Now a new ILS fund is launching in Bermuda with a specific focus on attracting Asian investors to deploy more capital to the ILS space.
Japanese asset manager Asuka Asset Management has announced that they have established a new ILS fund manager in Bermuda called Eastpoint Asset Management. The first fund to be launched under Eastpoint from this new venture is the Asuka ILS Opportunities Fund. According to a report in the Royal Gazette, Asuka Asset Management have seeded the Asuka ILS Opportunities Fund with $40m of capital and now Eastpoint Asset Management will seek to raise more capital from investors based in Asia.
Eastpoint Asset Management will be led by CEO Masahide Kitade, an ex Aon Asia and Mitsubishi Corp. executive. Kitade is perhaps better known in the ILS world for his part in a venture between Mitsubishi and Bermuda based ILS manager Pentelia, when they launched Pentelia Diamond Capital Management Ltd. and the Eolia Diamond Ltd. ILS and reinsurance-linked asset fund back in 2009. So Kitade has a track record in the ILS space which should assist with his fundraising efforts.
Masahid Kitade is quoted as saying; “We are targeting Japanese and Asian investors. They are becoming more interested in ILS investment as sophisticated alternative investment but they have to look across the world to find the best opportunities.”
For Asuka Asset Management this gives them an anchor investment in an ILS fund at a time when it is a particularly attractive investment opportunity. For Eastpoint Asset Management, having the backing of a Japanese asset manager with approximately $700m of assets under management may give them an easier way to access other investors in Japan and Asia.
Asian investors, such as pension funds, can spend a long time researching an asset class before committing to the space. They can also have very different motivations to investors from the rest of the world, often Asian investors are not looking for the high risk/return strategies preferring a lower volatility, safer investment with a lower return. Japanese pension funds are a good example of this but have significant sums of capital to put to work in investment strategies that meet their requirements. Hence anyone targeting the Asian investment market who can provide a suitable opportunity for investors from that part of the world could find fundraising a long, but ultimately rewarding process.
We’ve received the official press release so felt it worth adding the full quotes from the Eastpoint management team.
CEO, Masahide Kitade said; “We are targeting Japanese and Asian investors. They are becoming more and more interested in ILS investment as sophisticated alternative investment but they have to look across the world to find the best opportunities. I understand that overall share of Asian investors in the ILS space is still said to be less than 5%, therefore we believe this is considerable opportunity to us through collaboration with Asuka Asset Management.”
Teruhisa Shimbara, Chief Investment Officer (ex portfolio manager at AIFAM) added; “We are proud to be able to provide sophisticated investment solutions for our clients. I believe this new fund has strong appeal especially for conservative investors in Japan and Asia seeking low volatility and low correlation with other asset classes.”