The Ontario Teachers’ Pension Plan (OTPP), the largest private pension fund in Canada with around $189.5 billion of assets under management, has maintained its key ILS investment relationships with Nephila Capital and RenaissanceRe through the last year.
As of the end of December 2017, the Ontario Teachers’ Pension Plan (OTPP) cited two investment positions of over $150 million each that relate to ILS-style vehicles within its key partnerships, according to its annual report.
The first is an allocation to a Bermuda ILS fund vehicle named the Hudson Catastrophe Fund Ltd., which we understand to be a fund-of-one or private mandate managed by the largest ILS investment specialist in the world Nephila Capital.
The Hudson Catastrophe Fund was established in 2006, company records from Bermuda show, suggesting that this ILS relationship between OTPP and Nephila Capital is now around twelve years old.
The exact size of the allocation to the Nephila managed Hudson Catastrophe Fund is not known, as OTPP does not disclose the size of specific investment positions.
The other ILS type relationship of interest is a $150 million or greater allocation to the DaVinciRe Holdings vehicle, managed by Bermudian reinsurer RenaissanceRe.
DaVinciRe is of course a little different, being an equity investment we presume as this is a rated reinsurer. But the end-result for Ontario Teachers’ is the same, access to reinsurance-linked returns from a vehicle underwriting catastrophe risks and managed by one of the leading third-party capital specialists.
Ontario Teachers’ has more invested in ILS and reinsurance but it is not disclosed. The pension plan has been investing in ILS for well over a decade and has the ability to allocate directly to transactions in some cases, as well as through managed vehicles.
In the past the pension has had more than a billion dollars allocated to ILS, but it does tend to increase and decrease its allocations depending on market conditions. However these two core relationships with Nephila Capital and RenaissanceRe are maintained and provide core access to reinsurance linked returns for Ontario Teachers’.