Asset manager Schroders has expanded its reach in the insurance and reinsurance linked investments (ILS) space to enable it to directly target U.S. and Canadian investors by launching a new Cayman Islands domiciled fund vehicle.
Schroders (Schroder Investment Management) manages ILS and reinsurance assets totalling more than $1.7 billion (at 1st September 2015) across a variety of ILS or catastrophe bond fund strategies and mandates.
To-date its investor base has largely been cultivated across the UK and Europe, or through the U.S. offshore investment market. In order to gain greater and more effective access to the U.S. and Canadian investor base, a potential growth market as ILS is not as widely understood or allocated to as you might think, Schroders has set up a new ILS fund vehicle.
The Schroder Advanced ILS Fund (Cayman) Ltd. was launched at the end of 2015 with seed capital supplied by Schroders itself.
Tim van Duren, Investment Director, Insurance Linked Securities at Schroders, told Artemis that the new fund “Is basically a clone of our existing Cayman-domiciled All-ILS fund, the Secquaero ILS Fund, which invests in a diversified portfolio across a range of instruments and risks including life risks such as extreme mortality and embedded value (Value in Force), but not in life settlements.”
The Schroder Advanced ILS Fund, a Cayman domiciled corporation, almost mirrors the underlying ILS fund and is managed very similarly, but is not an exact representation due to differences in tax and regulation, amongst other factors.
The set-up will enable Schroders to offer U.S. and Canadian investors access to an investment strategy with a long-standing in the market, the underlying ILS fund has been in existence for some years. For Schroders the benefit is to extend its reach and allow it to market more directly into the United States and Canada.
“We have been building up a pipeline of potential investors, mainly US and Canadian pension schemes and US onshore family offices. We expect to grow the Fund significantly in the coming years, offering US and Canadian investors access to a broad range of insurance risks,” van Duren explained.
It’s becoming increasingly important for ILS fund managers to gain broader reach, in order to be able to market investment strategies to a wider potential investor base. The U.S. remains a relatively unsaturated market for ILS, with many pension funds yet to be educated on the asset class. That makes accessing the U.S. a very attractive prospect.