Alternative investment specialist, BroadRiver Asset Management, L.P, has successfully raised $366 million from existing and new investors for its life settlement fund, BroadRiver II.
The fund aims to deliver attractive risk-adjusted returns with limited volatility and negligible correlation to broader financial markets, by holding a significant number of non-contestable life insurance policies, and other longevity risk assets.
“We’re pleased with the response to our most recent fund from existing and new investors. The breadth and diversity of our limited partner investors affirms the confidence of institutional investors in life settlements.
“Institutional interest in this space has expanded dramatically in recent years and we expect to see continued long-term growth,” said Andrew Plevin, Co-Chief Executive Officer (CEO) of BroadRiver Asset Management.
The firm explains that BroadRiver II includes commitments from a varied base of institutional investors, which includes both public and private pension plans, insurers, and sizeable family offices across North America, Europe, the Middle East, and Australia.
The entity’s funds are made up of carefully constructed portfolios that aim to deliver strong, and stable cash flows. As a result of this approach and the construction of its portfolio, the firm was able to sell its previous portfolio, BroadRiver I, for a profit halfway through its ten-year commitment.
“BroadRiver’s rigorous approach to underwriting is informed by a curiosity about what we don’t know, and a healthy scepticism about our own assumptions. The result is conservative modeling which reduces cash-flow volatility and risk to principal, without sacrificing returns or the timely deployment of capital,” said Philip Siller, Co-CEO of BroadRiver Asset Management.
Life settlements have had a somewhat chequered past, after a number of bad actors tainted the reputation of the asset class and as a result certainly aren’t for everyone. But there has been a notable effort from the market to clean up its image and make amends for previous mistakes.
Certain insurance-linked securities (ILS) fund managers do invest in life settlements via their life related ILS funds, however as we’ve written before there are hurdles to overcome before broader adoption is seen in the ILS market.
But, with the expectation from BroadRiver that institutional investors are growing their presence in the life settlements space, this could result in more ILS funds participating in the sector and more insurance-linked investment opportunities in general.