Florida State Board has Lloyd’s investment in pipeline, to diversify more as cat ILS softens

The Florida State Board of Administration, allocating to insurance-linked securities and reinsurance for the Florida Retirement System pension plan, remains focused on navigating the softening market environment by adding more diversification within the asset class, with a Lloyd’s specialty investment moving through its pipeline still.

When we last reported on the Florida State Board of Administration and the ILS investments it makes for the giant Florida Retirement System pension plan, its staff had reiterated their view that with reinsurance rates softening catastrophe exposed insurance-linked securities could become less attractive and the investor even envisioned a potential “significant reduction” if the direction of travel persisted.

As we noted at the time, diversifying further within the ILS and reinsurance sector is one way the investor could achieve its goal, to reduce exposure to softening catastrophe reinsurance pricing.

At an recent investment advisory council meeting earlier this month, the topic was raised again and the expectation remains that property cat ILS exposure will likely be reduced, while additional diversification is targeted.

Subhasis Das, Senior Portfolio Manager, Strategic Investments explained that the ILS investments continue to have a target of up to 1% of the Florida Retirement System pension plan, which is currently around $234.6 billion as of June 30th 2026.

Das explained that the ILS component sits slightly below its target weight, at 0.9%, which suggests the overall ILS allocation of the Florida state pension is around $2.11 billion at this time.

The pension has ILS investments with a number of recognised specialist managers, being Aeolus Capital Management, Nephila Capital, Pillar Capital Management, RenaissanceRe and Tangency Capital, as well as a life settlements investment via Miravast.

In recent years, the Florida State Board has already begun diversifying within the ILS asset class, with the latest moves being allocations to a specialty strategy managed by Nephila Capital and to quota share reinsurance via a Tangency Capital strategy.

Commenting on market conditions and expectations for the ILS asset class at the September meeting, Das explained, “The opportunity set is still fairly attractive on a historical basis, but it has come down from its peaks.

“So, as premium rates have begun to moderate, it really reflects more supply due to retained earnings from the insurance companies.

“We expect to reduce P&C property casualty exposure over time as the rates come down, and deploy those funds elsewhere.”

Which suggests the Florida State Board may look to downsize some of its property catastrophe ILS investments, if market prospects deteriorate in cat reinsurance, as it looks to navigate the cycle, with that reduction seen as likely to occur over the next six to nine months, according to a meeting document.

The investment into Lloyd’s syndicates, via some kind of fund structure, remains in the works though, showing the State Board continues to see insurance as a valuable diversifying asset class for the Strategic Investments segment of the pension portfolio.

Das said, “We’re currently looking at a specialty Lloyd’s focused opportunity, which is in the pipeline.”

That investment has been in the pipeline for a while now, but given how timing works for capital allocation into the Lloyd’s market that is no surprise and we may see sight of this new allocation either later this year, or early in 2027 we suspect.

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