Fermat Capital Management launches Cat Bond PIE Fund for New Zealand investors

Fermat Capital Management has launched a new strategy specifically for investors in New Zealand, with the Fermat Cat Bond PIE Fund becoming the first cat bond fund structured in the tax efficient Portfolio Investment Entities format.

In recent year’s, the specialist catastrophe bond and insurance-linked securities (ILS) investment manager has been broadening its distribution reach through a build-out of its investor relations team, including the hire of Greg Hickling as an Investment Director in the APAC region, and by establishing new funds and access points to target more institutions and large investors.

This strategy has been delivering for Fermat Capital Management. We recently reported that the ILS investment manager has now surpassed $11 billion of cat bond and ILS assets under management for the first time.

In addition, Artemis was also first to report, that Fermat recently set up and launched its first United States domiciled cat bond fund structure, to support access to the asset class for US taxable investors and those that cannot invest offshore.

The newly launched Fermat Cat Bond PIE Fund is the first time this New Zealand investment structure has been utilised for an insurance-linked securities (ILS) strategy.

Fermat explained what the PIE Fund structure means for investors, highlighting that an investment into these structures means that fund income is usually taxed at the investor’s Prescribed Investor Rate, capped at 28%, rather than being taxed at their marginal tax rate, which can run as high as 39%. As a result, the investment manager noted that eligible investors in its Cat Bond PIE Fund may pay less tax than on a comparable directly held investment.

The Fermat Cat Bond PIE Fund will act as a feeder fund into the investment manager’s roughly US $2.8 billion Cayman Islands domiciled Fermat catastrophe bond strategy.

Fermat Capital Management has partnered with New Zealand based technology-driven wealth solutions specialist Adminis to launch this new cat bond fund in the country.

Adminis provides services including investment accounting, administration, custody, registry, and portfolio and performance reporting, to provide collaborative support for fund managers looking to operate in the New Zealand market.

Fermat Co-Founder Dr John Seo commented, “Fermat has been a pioneer of the ILS asset class since its inception in 2001, and we’ve managed investments for New Zealand investors since 2012. We have continually sought more efficient ways for investors to access it, and this PIE fund – the first tax-advantaged ILS fund of its kind – has been engineered specifically for the New Zealand market. We’re delighted to partner with the experienced team at Adminis to offer it to wholesale investors.”

Adminis CEO, Matan Gan-El added, “New Zealand investors have not had a simple way into this asset class. Cat bond returns are driven by insurance events rather than financial markets, and the PIE structure removes a barrier that has kept them out of reach. We are pleased to be working with Fermat to make this strategy available to wholesale investors.”

View information on many dedicated ILS fund managers, as well as reinsurers offering ILS style investment opportunities, in our Insurance-Linked Securities Investment Managers & Funds Directory.