Life ILS managers Schroders & Leadenhall invest in $43m Integrity Life Series B

Zurich-headquartered Schroder Investment Management (Switzerland) AG (Schroders) and London-headquartered specialist insurance-linked securities (ILS) and reinsurance linked investment manager Leadenhall Capital Partners LLP have both invested in a $43 million Series B fundraising for Australian life insurer Integrity Life.

ILS fund manager Leadenhall Capital Partners had already invested in the same life insurer back in 2018, when it participated in the debt arrangement part of a larger financing round for Integrity Group.

The $43 million Series B for Integrity Life saw most of the capital has coming from institutional funds managed by Schroder Investment Management (Switzerland) AG, a member of the Schroders group, with existing investors Leadenhall Capital Partners and Daido Life supporting the financing, and smaller contributions coming from Australian and International institutional investors.

The Series B round was raised both before and during COVID-19 and saw strong interest, Integrity Life said, citing this as evidence of its “digital-led positioning.”

Integrity Life intends to put the capital to work in expanding its operations and building on its digital-led insurance offering.

Chairman Eric Dodd, commented on the investment, “We’re thrilled to have the confidence and backing of Schroders, who have recognised that our approach to Life Insurance in Australia is changing the game. Our ethos of ‘digital when you want it, human when you need it’ allows us to marry the convenience of technology with an empathetic approach that guides everything we do. In an industry that is crying out for innovation, we’re excited that this injection will enable us to bring more Australian firsts and step-change improvements to both the financial adviser and customer experience”.

Scott Mitchell, Portfolio Manager for Life Insurance Linked Securities at Schroders stated, “We are excited to support Integrity Life in its next phase of growth as it continues to strengthen its position in the Australian life market. The investment provides Schroders’ investors with a rare opportunity to support a digital-focused business that provides access to diversifying life insurance risks, such as mortality, critical illness and disability.”

Dodd continued, “We are on a growth trajectory, despite the backdrop of COVID-19 and a possible global recession, our low-cost operating model and flexible technology systems give us a significant advantage to adapt and pivot to keep pace with change. We are very excited about the future and what we’ll be bringing to market.”

Both Schroders and Leadenhall operate successful life insurance-linked securities (ILS) investment fund strategies, allocating capital on behalf of their investor base into life insurance and reinsurance related assets and securities.

Integrity Life has been seen as a disruptor, targeting rapid growth using its digital distribution platform to take share in the Australian life insurance market at a time when the sector has consolidated significantly.

Investing in such high-growth, distribution focused life insurance start-ups helps to bring additional life insurance linked returns to investors in the Schroders and Leadenhall ILS funds.

The structure of the financing hasn’t been revealed, but through it the funds will gain additional exposure to mortality or other diversifying life insurance or reinsurance related exposures for their investors.