Blackstone multi-strat fund ILS allocation to Aeolus shrinks

Blackstone Alternative Asset Management, the hedge fund solutions unit of Blackstone, has trimmed back its holding in a strategy managed by Aeolus Capital Management Ltd., while one managed by PIMCO has shrunk slightly on valuation changes.

Bermuda based ILS and reinsurance asset manager Aeolus first took an allocation to its flagship Property Catastrophe Keystone PF Fund LP amounting to roughly $102.85 million from asset management giant Blackstone back in 2019.

The investment was made on behalf of the Blackstone Alternative Multi-Strategy Fund, a multi-fund manager focused strategy that has incorporated insurance-linked securities (ILS) and reinsurance for a number of years now.

Nephila Capital has been a sub-advisor to this Blackstone multi-strat alternatives fund since at least 2013, although it has not always had an allocation from the fund to manage.

Asset management giant PIMCO was also selected to manage an ILS allocation for the Blackstone fund in recent years.

Blackstone itself also has a liking for ILS and reinsurance as an asset class, having become an anchor investor in ILS asset manager Hudson Structured Capital Management’s funds and also been the asset manager behind AXIS Capital’s Harrington Re total-return reinsurance vehicle.

On top of this, Blackstone also looks to ILS capital for risk transfer of other asset classes it manages, with real estate a particular focus, as we’ve previously explained.

The Blackstone Alternative Multi-Strategy Fund had reported a just over $115.5 million allocation to the Aeolus managed Property Catastrophe Keystone fund strategy as of September 30th 2021.

Now, in its latest annual report filed with the SEC, the fund reports its Aeolus Property Catastrophe Keystone allocation as smaller, at just over $51.7 million at March 31st 2022.

This looks like a fresh allocation for 2022, as the cost of the investment is cited as almost $53.5 million.

The Blackstone multi-strat fund’s allocation to a PIMCO ILS Fund SP II strategy was costed at $17 million in the latest report, while last September’s figure had an allocation of almost $20 million reported on a cost of over $22 million.

The latest valuation, at March 31st 2022, the PIMCO ILS fund allocation is reported as almost $14.3 million, with price effects in the cat bond market the likely cause of that being lower than the roughly $17 million cost.

It’s good to see the Blackstone alternatives fund continuing with its ILS and reinsurance allocations, albeit at smaller size.