London-headquartered specialist insurance-linked securities (ILS) and reinsurance linked investment manager Leadenhall Capital Partners LLP has secured an £80 million allocation to its funds from the North Yorkshire Pension Fund.
The pension fund, which manages pension assets for council and local government workers in the Yorkshire region of the UK, had launched a search for an ILS fund manager last November to take its first allocation to the space, which it said at the time could be for as much as 5% of its assets, or roughly £165 million.
The North Yorkshire Pension Fund has now concluded its procurement process for a manager to look after its first ILS allocation and has selected Leadenhall, a manager which had $4.7 billion of ILS and reinsurance linked assets under management as of January 1st 2018.
The pension had approached the ILS market in search of a source of diversification and as part of a de-risking strategy for its asset base, as the fund shifts away from having too much of a focus on equities.
In fact, in an investment strategy update report, the North Yorkshire Pension Fund said that the capital to make the ILS allocation would be freed up by selling equity positions.
As ILS investment allocations are typically easier to make around reinsurance renewal time, so January and mid-year, the pension had been targeting June for its first allocation and has hit that goal.
However, the pension fund’s investment report states that the allocation would only be for the £80 million due to the “current capacity limitations within the Leadenhall Funds.”
It can be difficult for large allocations to be deployed, especially in a year like this where ILS investments are in demand and managers like Leadenhall will be dealing with competing requests from end-investors to allow them to allocate more capital to its funds.
However, the pension asked its committee members to delegate authority to the Treasurer to allocate another £80 million, to take them up to the roughly £160 million target when the ILS funds have capacity available for them.
The North Yorkshire Pension Fund’s investment in Leadenhall managed ILS funds is being split equally across three strategies, with £26.67 million being put into each of the Leadenhall Diversified Fund, Nat Cat Focus Fund and the managers newer Remote Risk Fund strategy.
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