Swiss Re Insurance-Linked Fund Management

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ILS Advisers launches, first Asia based insurance linked investment consultant


Hong Kong based HSZ Group, an independent investment manager, has today launched a new business unit called ILS Advisers. ILS Advisers has been established with the sole purpose of developing the Asian market for insurance-linked investments and they are the first investment consultant based in Asia with a focus on insurance linked investments, including insurance-linked securities such as catastrophe bonds.

ILS Advisers is an independent investment adviser and as such not managing a fund or selling any of their own products. Rather they are offering advice and consultancy to professional investors in the Asia region to help them identify the best ILS managers and products to invest in. ILS Advisers will help its clients to better understand the opportunities in the ILS and insurance-linked investment space through identification of opportunities and monitoring of their performance. They aim to help clients understand the asset class, support them in the selection and investment process and provide an ongoing service once investments are made.

This service could be extremely helpful to investors in Asia who are seeking to enter the ILS space. As the ILS market is dominated by Bermuda, Cayman Islands, U.S. and Europe, Asian investors have to look across the world to find the best opportunities. A dedicated adviser in the region will help investors to better understand and more easily access these opportunities. It could also help to stimulate the growth of a local ILS market by raising the profile of instruments such as insurance-linked securities and catastrophe bonds.

ILS Advisers will target Asian domiciled investors such as sovereign wealth funds, pension funds, banks, corporate treasuries, family offices and fund of funds as a potential client base.

“We believe in this unique asset class due to its attractive performance, stable returns, low correlation to other asset classes and built-in inflation protection”, says Hansrudolf Schmid, president and founder of HSZ Group.

“With insurance linked investment strategies we can offer a solution for the difficulties many institutional investors face with their fixed income allocations”, adds Stefan Kräuchi, who is spearheading the new business unit.

ILS Advisers provide some insight on the size of the Asian opportunity. They say that despite the ILS market having returned an average of 8% per annum over the last ten years, no negative year, only 8 negative months and volatility of less than 3%, insurance linked investments are still barely known in Asia. The overall share of Asian investors in the insurance linked asset class is said to be below 3%, which is extremely low when you consider the size of some funds and family offices in Asia.

“We want to bring professional Asian investors up to speed on this asset class and double the share of Asian investors in this space over the next three years,” says Kräuchi.

With an experienced team, Kräuchi spent time with leading market participants such as Clariden Leu, UBS and AIG Investments, the backing of HSZ Group who have great access to Asian markets such as China, and being locally domiciled, ILS Advisers have every opportunity to open Asia up to ILS and cat bond investment opportunities. This could be an extremely important launch for the market and could increase yet again the interest that the sector is seeing from investors looking for non-correlated returns in the current financial market climate.

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