Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Hiscox ILS fees rise on improved fund performance in 2020


Hiscox ILS, the insurance-linked securities (ILS) and collateralised reinsurance underwriting unit of specialist underwriter Hiscox Group, has reported a rise in fee income earned from its ILS investment management business in 2020.

Hiscox logoHiscox’s ILS funds saw their assets under management decline slightly to $1.4 billion at the end of 2020, down from $1.5 billion at the end of 2019 after a number of redemptions.

But the ILS funds seemingly performed better in 2020 and as a result Hiscox earned a little more income from them.

The company has reported that its other underwriting income, which represents the results from the insurance-linked securities (ILS) managed by Hiscox ILS, rose to $2.5 million for 2020, a significant increase from the $900,000 of other income reported for 2019.

At the same time, Hiscox ILS activities earned the group higher management fees as well, with Hiscox reporting $24.1 million of management fee income across its various insurance, reinsurance and ILS activities during 2020, up from $19.7 million in 2019, which as this figure is largely ILS related suggests the investment management fee income earned from ILS has likely risen in line with the results of the ILS funds.

At the same time, profit-commissions actually declined, coming out at $1.5 million for 2020, down from $3.9 million in the prior year. But this includes Lloyd’s managing agent commissions as well, we understand, and given the impacts of the COVID-19 pandemic it is possible that here too the ILS commission saw a slight improvement year-on-year.

As ever, it’s hard to derive the exact figures from this, but overall it suggests a better year of ILS fund performance for Hiscox ILS, which drove a slightly increased amount of fee income from its insurance-linked securities (ILS) and collateralised reinsurance management activities.

Also of note, while having reported its AuM as slightly down at the end of 2020, Hiscox ILS’ flagship commingled ILS funds (the Kiskadee Diversified Fund, Kiskadee Select Fund, Kiskadee Latitude Fund and Kiskadee Cadence Fund) were actually slightly up for the year as a group.

Hiscox said that the total size of the Hiscox ILS funds sat at $899 million at the end of December 2020, slightly higher than the $888 million seen at the end of 2019.

Hiscox’s own investment stake in the ILS funds rose very slightly to $63.2 million at the end of 2020, up from $61.2 million at Dec 31st 2019.

The rest of the $1.4 billion of ILS assets managed by Hiscox ILS sits in private mandates, we understand.

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