Integral ILS Ltd., the start-up insurance-linked securities fund manager launched by industry execs Richard Lowther and Lixin Zeng, has secured its first investor commitment, from Canadian pension giant the Public Sector Pension Investment Board (PSP Investments).
PSP Investments manages around CAD $169.8 billion of net assets and we understand this to be the pension giants first allocation to insurance-linked securities (ILS).
PSP has been exploring ways to enter the ILS market for some year’s now, we understand.
PSP is already affiliated and has a strong relationship with as a 30% owner of, direct risk originator and distributor AmWINS, which itself has a stake in Integral ILS Ltd.
Integral ILS was launched earlier this year and has been working on securing investor relationships, with a target of starting to build out its first ILS fund portfolio in time for the January reinsurance renewals.
Integral said that PSP Investments has provided it with significant LP (limited partnership) investment commitments to launch a new dedicated ILS strategy.
This new ILS fund strategy will be focused predominantly on natural catastrophe-linked reinsurance and insurance transactions.
“Integral is honored to have been awarded a cornerstone ILS investment mandate by top-tier pension manager PSP Investments. We appreciate the trust placed by PSP Investments in the Integral team and are committed to meeting their high expectations,” Lixin Zeng and Richard Lowther, co-founders and Managing Partners of Integral said.
“The Integral mandate represents PSP Investments’ first ILS allocation as part of our Alternative Risk Premium strategy,” added Eduard van Gelderen, Senior Vice President and Chief Investment Officer, PSP Investments. “ILS is an attractive asset class given its low correlation and diversification benefits for our portfolio. We are excited to enter into a long-term partnership with such an experienced and well- regarded team in the space.”
We understand Integral is aiming to begin by sourcing risk via its relationships with AmWINS and its other stakeholder reinsurance firm TransRe.
These relationships provide the manager with access to risk that can be fully-fronted and also much more diversified, than a typical start-up ILS fund manager would be able to achieve.
That will tick a lot of boxes for a relatively conservative investor like PSP.
Integral will also be able to write direct collateralized reinsurance and retrocession itself as well, using its recently established Bermuda special purpose insurer (SPI) Integral Reinsurance Ltd. (Integral Re).
Integral says that it aims to, “Drive further evolution in the ILS fund management model with an investor- focused fiduciary that also benefits from a long-term and stable alignment with industry leaders in reinsurance and insurance underwriting and distribution.”
We understand further investor discussions are underway and Integral is hopeful of announcing more commitments before year-end.