Ledger Investing has launched its first insurance-linked securities (ILS) fund, a casualty risk focused strategy backed by a single investor, and an ILS management unit, Ledger ILS Managers LLC. While the firm plans a $300 million co-mingled casualty ILS fund strategy as well.
Using its own technology platform, a marketplace for connecting capital market investor funding with insurance and reinsurance risks, Ledger Investing has announced the closing of Nanorock Fund Ltd.
The Nanorock Fund will invest primarily in casualty insurance risks through the Ledger Connect platform, its proprietary tech platform, with a range of longer-tailed liability driven lines in scope.
Nanorock Fund will be able to invest in workers’ compensation, general liability, commercial and private passenger auto liability, as well as other casualty insurance risks in the US and Europe, Ledger Investing explained.
The Nanorock Fund has been capitalised by a single large pension plan, so is a fund of one.
It is the first specific casualty ILS fund strategy in the market and Ledger plans to turn the strategy into a multi-investor structure as well, with a co-mingled fund now in the works for which it is targeting a $300 million fist close, the company explained to Artemis.
This should prove attractive to more sophisticated investors looking to access diversification within the ILS and reinsurance space.
Casualty risks have been dabbled with in ILS, with a number of transactions entered into and some managers seeking out longer-tailed returns. In addition, the quota share sidecar space has seen some casualty risks transacted.
But Ledger’s new fund and the coming co-mingled version are the first managed investment funds with a specific casualty risk focus.
The planned co-mingled casualty ILS fund will have the same investment mandate as this fund-of-one, Rajiv Punja, CEO of Ledger ILS Managers, LLC explained to Artemis.
He further explained that the casualty insurance or reinsurance business the Nanorock ILS fund invests in will generally be sourced directly from originators, so managing general agents (MGA’s) and the like, but Ledger will also work with brokers in some instances.
Ledger Investing also launched its own specialist ILS investment management unit, Ledger ILS Managers LLC, which is a wholly owned subsidiary and an investment advisor registered with the SEC.
Commenting on the launch, Punja, CEO of Ledger ILS Managers, LLC, said, “We are honored to have received the backing of a sophisticated ILS institutional investor who shares our views on the opportunity for data driven investing in the casualty insurance market and is committed to growing the asset class.”
“The substantial commitment and strategic focus of the investor marks a pivotal point for the institutionalization of casualty securitization,” Samir Shah, CEO and co-founder of Ledger Investing added. “The market continues to support our conviction that the most promising path for exponential growth is by leveraging technology to bring the ultimate capital providers closer to the risk originators, standardize securitization structures and provide industry-leading risk analytics and transparency.”
“The Fund allows us to swiftly deploy capital to meet the long-term capacity needs of managing general agencies (“MGAs”) and insurance companies while providing attractive and diversifying returns to our investor partner,” Brad Fischtrom, COO of Ledger Investing, Inc stated.
Speaking with Ledger ILS Managers, LLC CEO Rajiv Punja, we explored a little more deeply the Ledger Investing strategy and how it brings value to cedents and capital market investors.
Punja told us that, “This is not about more efficient capital, it is about creating a more efficient value chain, with transparency and objective data analytics for casualty risk.
“At the moment our value proposition to MGAs is multi year capital commitments, objective pricing and risk analytics, and speed to market. We let risk originators do what they do best, source and service risk.
“We help them finance that risk by bringing transparency to the value chain, allowing investors to get unprecedented insights into the risks they are taking. This opens up a universe of investors that have traditionally been put off by the opacity of the value chain and the risks they are taking.
“We are looking to do for insurance what securitization did for credit. For risk originators this is about capital management rather than risk management.”
The casualty ILS fund could be just the starting point for Ledger, with other classes of business clearly also likely to benefit from this data-driven and partnership approach.
But for now the main focus is on the new casualty ILS strategy, a unique offering in the ILS fund market and raising the $300 million for a co-mingled casualty ILS fund is the next priority, after this fund-of-one launch.
“From a Fund perspective, our focus will continue to be frequency driven casualty portfolios. Ledger’s vision for transparency in relation to the value chain begins with a data pipeline. We use our data advantage to price and offer securities in the capital markets and build a marketplace for these securities. We believe that that is just the tip of the iceberg. Insurance decision making (both internal and external) should run off single source real-time data. We are working on the technology to make this possible. Think of us as the Plaid for insurance. You come to us to access the capital markets. You stay for everything else we offer!” Punja said.