The North Yorkshire Pension Fund, a pension scheme for council and local government workers in the Yorkshire region of the United Kingdom, increased its allocation to insurance-linked securities (ILS) funds under the management of Leadenhall.
Having originally won a mandate from the pension fund for an £80 million allocation in 2018, London-headquartered specialist insurance-linked securities (ILS) and reinsurance linked investment manager Leadenhall Capital Partners LLP has since nearly doubled the amount of assets it manages for the pension.
The North Yorkshire Pension Fund began its search for a manager of ILS and reinsurance-linked assets back in early 2018, looking for an allocation that it said could run to as much as £165 million.
The pension fund said at the time that it was hoping to eventually reach a 3.3% to 5% allocation to ILS out of its total assets, at the time would have equated to £110 million to £165 million.
The pension fund selected Leadenhall and began deploying capital into its range of ILS funds.
This began with allocations to three of Leadenhall’s ILS funds (with different risk and return profiles) in the second quarter of 2018, amounting to 2.3% of the pension funds assets, or £80 million.
The ILS funds all beat their respective benchmarks through the third-quarter of the year, but the Q4 catastrophe activity hit their performance and the value of the investments declined at the time.
The North Yorkshire Pension Fund elected to double-down on its ILS allocation though, not put off by the loss activity and likely seeing the benefit of raising its allocation at a time when rates were seen to be rising.
As a result, by the end of March 2019, the allocation to three of Leadenhall’s ILS funds rose to just slightly under UK £160 million, so very close to the top-end of its forecast ILS allocation ambitions.
In the first-quarter of 2019 two of the Leadenhall ILS fund allocations beat their benchmarks for the pension fund, while the third came in just slightly below and was flat for the quarter.
Timing can be everything in investing and the pension fund could find its increased allocation performs well throughout the rest of the year, as long as global major insured catastrophe loss activity remains relatively benign.