Florida Retirement System Pension sees strong returns from ILS, allocation nears $2bn

The Florida Retirement System Pension Plan, which is administered by the Florida State Board of Administration, has benefited from very strong performance across its allocations to insurance-linked securities funds, with its assets invested in ILS now approaching $2 billion.

Insurance-linked security fund investments have been a growing component of the Florida state pension plan’s allocations within its strategic investments bucket over recent years.

As of the latest reporting, at September 30th 2025, the Florida Retirement System Pension Plan puts its ILS fund investments, which span catastrophe reinsurance and life insurance settlements, at roughly 15% of the strategic investments, up from 13% when we last reported on its data as of the mid-year.

The ILS and reinsurance investments made by the giant Florida state pension fund still stand at 0.9% of total pension plan assets, but with the overall portfolio having increased so too has the allocation to ILS and reinsurance-linked investments it seems.

The ILS fund and reinsurance investment strategies allocated to by the Florida Retirement System Pension Plan now amount to just over $1.97 billion we believe, so fast approaching the $2 billion mark.

It appears to be strong performance and accumulating returns that have driven the increase in assets allocated to ILS fund strategies over the last year, with no new strategies currently reported as of September 30th 2025.

However, as we’ve been reporting, the Florida state pension had two new ILS investments in its pipeline of new allocations around the middle of the year.

The goal was to onboard specialty and quota share reinsurance investment strategies and now, as of September 30th, it appears one of those may already have been onboarded while the other remained in the pipeline at that time.

There’s a good chance both might have been onboarded in time for the 2026 underwriting year, so we may get more clarity on those in the coming months once reporting disclosures are available.

As we suggested before, on the quota share side Tangency Capital springs to mind as one ILS manager offering a specific quota share reinsurance focused fund strategy, or it could be a sidecar partnership with a reinsurer. On the specialty side, Nephila Capital comes to mind as an ILS manager already working with the Florida state pension that has been underwriting specialty lines business for investors in recent years. We cannot confirm on either front at this time.

At a meeting of the FRS Investment Advisory Council on September 9th, Trent Webster, Senior Investment Officer – Strategic Investments, explained that the insurance and reinsurance investments had previously been a driver of underperformance in the pension’s hedge fund allocations.

But, in recent years that changed as the ILS market reset its structures and investment terms, while reinsurance rates hardened.

“What we have seen over the last couple years is a movement away from higher risk lines of insurance and moving up the risk tower into CAT bonds. This is a portfolio that is benchmarked to CAT bonds. And in the past, the mean loss — or the mean loss median return would be about 300 basis points over the CAT bond yield. Today, it’s about 5- to 600 basis point,” Webster explained.

Continuing, “So knock on wood, we don’t have any major hurricanes. We would expect, hopefully, to outperform the CAT bond index over the next few years.”

The Florida state pension sees ILS and reinsurance as still in a hard market albeit with rates falling, although it’s worth remembering this was assessed before the end of 2025 renewal outcome was clear.

Across its portfolio of ILS fund allocations the exposure to peak perils has been decreasing, with more diversification coming through its wider range of investment allocation points it seems.

The expansion into specialty lines and through quota shares is again highlighted as a strategic priority, so presumably those allocations may have been made by this time, or be close to implementation.

Florida wind still makes up 29% of the catastrophe exposure in the FRS ILS portfolio allocation, while US wind is at 17%, Gulf wind at 14%, other perils at 13% and US quake at 8%, according to the pension plan’s reporting.

But, in addition and having grown in recent years, Asia Pacific perils are 6%, Europe 6%, US convective storms 5% and US wildfire 2%.

Demonstrating why this major pension fund finds ILS and reinsurance a welcome diversifying contribution to its overall portfolio returns, the performance achieved by the ILS funds it allocates to has been impressive over the last year of record (to Sept 30th 2025).

As of that date, the FRS’ allocation to the Aeolus Capital Management operated Aeolus Property Catastrophe Keystone PF Fund delivered a 16.9% time-weighted one-year return and a very impressive 15.6% for the prior quarter.

The FRS’ allocation to the two Nephila Capital strategies it invests in were also very impressive, with the Arachne SAC Holdings segregated account delivering an 11.5% one-year return and 8.6% for the latest quarter, while the Rubik Holdings investment was the best performer in the FRS ILS allocation at a 23.2% one-year return and a stunning 35.7% for the latest quarter.

The Pillar Capital Management operated Juniperus Insurance Opportunity Limited delivered a healthy 8.7% one-year return and 4.6% for the latest quarter.

The RenaissanceRe Capital Partners managed Tintoretto Partners investment saw 14.5% one-year returns and 5.9% for the quarter.

Finally, the life insurance related investments, which are settlements, managed by Miravast delivered 8.5% and 13.4% for the one-year and 2% and 3.3% for the quarter.

The time-weighted three-year average return across the ILS, reinsurance and life insurance investment strategies now stands at around 14.7%, driving home the importance of the asset class to the Florida Retirement System Pension Plan.

Given the FRS’ long-term performance target for the hedge fund investment segment, where these ILS and reinsurance allocations sit, is just 6% to 8% over the long-term, currently the ILS and reinsurance investments are outperforming and a welcome relatively uncorrelated contributor to its portfolio returns.

View details of major pension fund and sovereign wealth investors in ILS and reinsurance in our directory.