Swiss Re Insurance-Linked Fund Management

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Fermat Capital Management lifts cat bond & ILS assets to $7.5bn


Fermat Capital Management LLC, the Westport, Connecticut headquartered investment fund manager that, has lifted its catastrophe bond and insurance-linked securities (ILS) assets under management to $7.5 billion before the end of 2020.

fermat-capital-management-logoIn fact, the latest figure we have for Fermat Capital Management’s catastrophe bond and ILS assets under management is for $7.5 billion as of November 2020, which suggests that some further growth in assets may have been possible before the end of the year.

Fermat Capital Management is largely focused on catastrophe bond investments, so fully securitized issuances featuring insurance, reinsurance and retrocessional portfolios exposed to natural catastrophe and severe weather events.

The investment manager has been in operation since 2001, when brothers John and Nelson Seo co-founded Fermat Capital with just $30 million of AuM and began investing into the ILS and reinsurance market on behalf of their investors.

Fast-forward almost two decades and the Fermat Capital ILS AuM figure has risen steadily. Just over one-year earlier, Fermat Capital Management counted $6.8 billion of ILS assets at September 2019.

The $7.5 billion of ILS AuM, at November 2020, now positions the investment firm as one of the largest managers of insurance-linked securities (ILS), catastrophe bonds and other similar collateralized reinsurance assets and funds in the market, according to Artemis’ ILS fund manager directory.

Fermat Capital, given its focus on catastrophe bonds and the fact it manages one of the largest UCITS cat bond funds (the GAM Star Cat Bond Fund that has over $2 billion of assets in it), will have been able to deploy fresh capital raised into the very busy fourth-quarter cat bond issuance market.

As we detailed in our new catastrophe bond market report, issuance reached record levels in the fourth-quarter of 2020 and full-year issuance also broke all records as well.

For established ILS investment managers like Fermat Capital, who have long track-records managing portfolios of cat bonds, this issuance activity will have provided a significant opportunity for adding some fresh capital, while also turning over some of the portfolio’s legacy positions for higher-returning newer vintage deals, which in recent months have come with higher risk-adjusted coupons.

This opportunity may have allowed Fermat to expand its catastrophe bond portfolios even further, perhaps even adding a little more AuM by the end of 2020.

View details on leading insurance-linked securities (ILS) investment fund managers in our Directory.

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