Kinesis assets under management up 20% year-on-year

Assets under management held by Kinesis Capital Management, the collateralized retrocessional reinsurance unit of specialty re/insurer Lancashire Holdings Limited, grew its assets under management 20% year-on-year.

Lancashire’s Chief Underwriting Officer Paul Gregory said that the company was delighted with the support shown by the Kinesis investor base, helping it to increase its assets in time for the January reinsurance renewals.

Gregory explained, “Given the dislocation in the retro market we were able to grow Kinesis at 1/1. We were able to secure additional support from our investors which was pleasing given the recent losses.”

In our ILS Fund Managers Directory we have Kinesis Capital Management listed with over $500 million of deployable assets under management at this time.

Kinesis Capital Management unit is the collateralized reinsurance and third-party capital management arm of Lancashire and it underwrites a unique multi-class, specialty and property catastrophe focused product which is used as a retrocession protection by major reinsurance firms.

Given the issues related to trapped collateral seen in the retrocession market at 1/1 2019, thanks to the losses suffered by some collateralized retrocessionaires and also a pull-back from some other retro providers, Kinesis’ product was always likely to prove popular and it’s possible the unit will have also broadened its customer base as well as growing its investor allocations.

Kinesis’ product has staunch support from regular protection buyers who like the multi-class nature of the product, suggesting as more ceding companies discover the product they could also become regular buyers too.

In terms of the growth in Kinesis assets under management, Darren Redhead, CEO of the unit, explained that assets under management grew 20% year-on-year, suggesting fresh commitments of $100 million or greater in time for the January renewals.

“We grew our AuM by 20%. We think we’ve seen good opportunities with respect to the business Kinesis underwrites, seen pricing up around 10%,” Redhead explained.

He went on to say that as well as growing the portfolio and achieving rate increases, Kinesis has also de-risked a little bit, presumably to reduce the potential for volatility in the strategy slightly.

Looking ahead Redhead is positive that further opportunities for deployment of capital might present themselves through the year.

He said he expects there will be a few opportunities, with Florida likely to prove a fascinating renewal.

“We will look to deploy more capital if we see the opportunities through the year,” Redhead explained.

Kinesis continues to follow its strategy of only growing when there are opportunities that deliver the risks it wants at the pricing it wants, suggesting January saw much better terms available to the unit.

The team at Kinesis continue to take these opportunities as they present themselves and as a result its unique products are gaining broader appeal, which is likely to drive continued adoption and growth potential for the business.