City National Rochdale ILW fund grows net assets 9% to $168.4m

The industry-loss warranty (ILW) focused mutual fund strategy offered by investment adviser City National Rochdale (CNR) has grown its net assets by roughly 9% during the last quarter of record.

While overall net assets grew by 9%, the investments held by the fund, which are largely in industry-loss warranties (ILW’s), as well as some catastrophe bond positions, grew less quickly at 4.5% over the period, suggesting a slightly higher cash equivalent component for the strategy.

The latest data, as of April 30th 2021, shows the City National Rochdale Select Strategies Fund had just over $168.4 million of total net assets, with almost $148 million of this invested into ILW contracts and cat bonds.

The City National Rochdale Select Strategies (CNRLX) fund is an interval style mutual fund, with a focus on investing in industry loss warranty (ILW) reinsurance and retrocession contracts across global peak peril zones and also regional U.S. ILW contracts. In addition, the fund holds some investments in catastrophe bonds.

The investments are allocated to segregated accounts of the NB Re Ltd. reinsurance underwriting and transformer vehicle (previously named Iris Re), which is operated by and portfolio managed by Neuberger Berman’s ILS team.

The CNR mutual ILS fund accesses the returns of the ILW market and sources its risk-linked investments through its relationship with asset manager Neuberger Berman’s experienced ILW and index trigger focused reinsurance investment team.

The fund has seen steady growth over recent quarters, growing by more than 35% since early 2020.

As of July 31st 2020 the fund had grown to just over $131 million, as we previously reported here and the investment manager cited a significant opportunity for growth in the firming reinsurance market environment.

By October 31st 2020, the fund’s ILS assets under management hadgrown again, with CNR reporting that the funds total net assets had risen by around 13% to reach just over $147.8 million.

The City National Rochdale Select Strategies (CNRLX) fund achieved further growth to reach total net assets of $154.3 million as of January 31st 2021.

Now, as of April 30th 2021, at $168.4 million of net assets, this ILW focused strategy is at a record size and likely poised to grow again at the next quarterly juncture, given the reinsurance renewal period will have offered new investment opportunities.

The ILW market, where the fund’s main focus lies, has been a beneficiary of rising reinsurance rates and can also offer some insulation against the more attritional losses that have hit some ILS funds over recent years, given its peak peril and industry loss trigger focused strategy.