Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Oregon Investment Council commit $100m to Nephila funds


The Oregon Investment Council (OIC) which oversees and manages the investment of most of Oregon’s State Treasury funds, including the Public Employees Retirement Fund, has become the latest large organisation of its type to commit investment funds into insurance-linked securities and reinsurance linked investments. At its most recent public meeting on the 7th December the OIC approved an allocation of $100m which will be managed by Nephila Capital.

A proposal had been presented to the OIC at their November meeting which suggested a commitment of $100m be evenly split between Nephila’s Palmetto and Juniper funds. Palmetto is Nephila’s ‘middle of the road’ fund while Juniper is a higher risk fund with a higher expected return. Both Palmetto and Juniper funds contain a mixed portfolio of insurance-linked securities (including catastrophe bonds), reinsurance contracts and instruments such as industry loss warranties (ILWs).

The OIC approved the proposal at their December meeting and the $100m will be allocated out of the OPERF Opportunity Portfolio (the employee pension fund) for Nephila to manage.

It’s good for the ILS market to see these commitments repeatedly coming from large, government managed pension funds to the likes of Nephila. The education process for these types of institutions can be a lengthy process, as at first glance ILS and cat bonds seem inherently risky, but once they understand the uncorrelated nature of the investment and the diversification opportunities it is easier to attract these sources of funds. We expect to see more reports of large inflows of capital from these types of organisation as the ILS investment opportunity receives more publicity and more investment managers begin to understand why it can be so attractive.

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