Leadenhall Capital: 91.5% of $1.4 billion ILS assets are pension fund sourced

London based insurance-linked securities and reinsurance-linked investment manager Leadenhall Capital Partners currently attributes a huge 91.5% of its ILS assets as commitments sourced from pension funds, according to data shared by Luca Albertini, CEO of Leadenhall Capital Partners at an event this morning.

The event, a media briefing held by BNY Mellon’s EMEA Insurance team at its London office this morning, saw Luca Albertini give an overview of Leadenhall Capital Partners strategies as an ILS asset manager and a view of its growth in recent years.

Leadenhall Capital Partners has experienced strong growth in recent years, hitting total assets under management of $1.43 billion by the 30th of June this year. As we wrote back at the end of May, Leadenhall broke the $1.4 billion barrier thanks to an injection of capital from the New Zealand Superannuation Fund. Hitting the $1.4 billion mark came very quickly on the heels of having only cleared the $1 billion AuM mark back in March of this year, impressive growth for the London based ILS manager.

At today’s event Albertini gave some insight as to the mix of Leadenhall’s insurance-linked assets under management. Of the $1.43 billion, $650m is in life insurance-linked investment strategies while $780m is in non-life insurance-linked strategies. Leadenhall’s life strategy has been growing strongly since it launched its new life fund back in March.

Albertini also shared the investor mix within its funds and assets and interestingly it is very strongly weighted towards pension funds. Leadenhall counts 91.5% of its assets under management, or approximately $1.3 billion, as sourced from pension funds. This is impressive and potentially among the highest percentages a manager has sourced from pension funds in the sector. Albertini said that the remainder is made up of insurance firms at 6.7% of its assets and private banking or family offices at 1.8%.

Interestingly Leadenhall seems to have considerable success with raising capital from pension fund investors, perhaps a very sensible strategy given that pension fund capital tends to be considered most likely to be sticky in the ILS and reinsurance market, due to its longer investment horizon.

Many other ILS managers have much larger percentages of their assets committed by private banking type investors, while other managers still have significant portions of their commitments from insurers or even hedge funds. As we wrote recently, Nephila Capital the largest manager in the space, counts around 76% of its assets as sourced from pension funds.

Albertini explained that he feels the market is now becoming more focused on strategic investors, rather than opportunistic, and that pension fund capital is more likely to stick around, subject of course to major pricing changes in the market.

This is further evidence of the growing influence, and capital commitments, that the world’s large pension funds are having on the ILS space. With this interest set to continue, and perhaps grow, the sector could see many more investment managers upping their contributions sourced from pension funds in the years to come.

Read our recent article: Still early days for pension fund allocations to ILS and reinsurance.