Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Hiscox ILS raised $100m-200m fund for special renewal opportunities


Hiscox ILS, the insurance-linked securities (ILS) and collateralised reinsurance underwriting and investment management unit of the Hiscox Group, raised investor funds to deploy into specific opportunities around the mid-year reinsurance renewals.

Hiscox ILS logoWe’re told the special opportunities ILS fund has been largely deployed into opportunities in Florida’s reinsurance market, as Hiscox ILS looked to capitalise on what could be some of the best rates and terms available in more than a decade.

The company wasn’t the only ILS investment manager to view the Florida and broader US southeast and Gulf coast reinsurance renewal opportunities as particularly attractive this year.

As we reported last week, Aeolus Capital Management also raised a specific capital facility (named Corbel) and deployed it into largely Florida reinsurance opportunities, as well as some other adjacent and wind-exposed regions.

The Hiscox ILS special opportunities fund has been raised largely from existing institutional investors that were already allocated to Hiscox’s ILS fund strategies, but that understood the market opportunity in the dislocated mid-year reinsurance renewals.

With capacity dented, risk appetites lowered and other factors all conspiring to make the mid-year renewals particularly challenging this year, the result has been some attractive underwriting opportunities in market conditions many have cited as the best in years.

Reinsurance pricing has been higher than seen for over a decade for risks in Florida and other coastal and wind-exposed US states, while at the same time terms and conditions are also dramatically improved.

These factors alongside promised improvements to the general Florida insurance market situation, to come through this year’s special session legislative reforms, mean some ILS managers have sought to capitalise on this for their clients.

Hence, Hiscox ILS’ special capital raise, which we understand has seen the full between $100 million and $200 million deployed into occurrence reinsurance layers with a Florida focus, but also some other Gulf Coast and coastal state risk included as well.

Market conditions have meant underwriters can deploy their capital into higher-layers of reinsurance towers, on a single-shot basis, and with enhanced terms around peril definitions and coverage as well.

All at pricing levels not seen for years, making this an opportunity companies like Hiscox ILS could not miss for its investors, we imagine.

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