The Florida State Board of Administration, which manages around $201 billion of assets in state pension and investment plans, added $400 million of new allocations to a range of top insurance-linked securities (ILS) managers in the second-quarter of 2019.
The beneficiaries of the allocations are funds under the management of ILS specialists Aeolus Capital Management, Pillar Capital Management, Nephila Capital and RenaissanceRe.
The largest of the state pension and investment schemes that the Florida State Board of Administration manages is the near $158 billion Florida Retirement System (FRS) Pension Plan.
The allocator is no stranger to insurance-linked securities (ILS) and reinsurance linked investments, having already had investments in the same four leading ILS fund managers prior to these fresh Q2 2019 investments, as well as an allocation to Credit Suisse Insurance-Linked Strategies as well.
Back in the fourth-quarter of 2017, following the active hurricane season, the Florida State Board made its first allocation to insurance-linked securities (ILS), with a $250 million investment in RenRe’s Tintoretto Partners, L.P. mooted, which we understand to be a Delaware located reinsurance investment fund vehicle.
However, that RenRe allocation to Tintoretto was only valued at $66 million, based on an acquisition cost of $65 million at the middle of 2018, so it does seem the $250m allocation may not have been reduced in the end.
That was followed by a $50 million first investment from the Florida State Board into Nephila Capital’s Rubik Holdings Ltd. in Q1 of 2018.
Later in 2018, the Florida State Board allocated $150 million to the Credit Suisse Insurance-Linked Strategies managed ILS Property & Casualty Master Fund and $50 million each to Aeolus’ Property Catastrophe Keystone PF Fund and Pillar’s Juniperus Opportunity Fund.
The new Q2 allocations are all follow-on’s, we were told by John Kuczwanski, External Affairs Manager for the Florida State Board.
During the second-quarter of 2019 the Florida State Board allocated $50 million to the Aeolus Property Catastrophe Keystone PF Fund, $100 million to Pillar Capital’s Juniperus Opportunity Fund and $125 million to each of the Nephila managed Rubik Holdings and RenRe managed Tintoretto Partners vehicle.
So the total $400 million of ILS asset class allocations in Q2 2019 take the Florida State Board’s allocations into the ILS and reinsurance linked investment sector to somewhere between $765 million and $950 million (depending on the Tintoretto allocation size) since mid-2017, which is significant but still a very small slice of its overall $201 billion asset pile.
The Florida State Board has a target to allocate around 12% of its assets into what it terms strategic investment classes, which is where ILS sits. The investor still has a way to go, which could result in further allocations into ILS and reinsurance, if market conditions remain conducive.