Stone Ridge Asset Management, the beta and alternative risk premia focused mutual fund manager, has reached $5.5 billion of insurance-linked securities (ILS) and reinsurance linked assets under management, with its Reinsurance Risk Premium Interval Fund leading the way with 23% growth in the last quarter.
Stone Ridge continues to see impressive growth across its reinsurance and insurance-linked securities (ILS) strategies, with a 9% increase in overall ILS assets under management in the three-months to the 31st January 2017.
At the last reporting juncture, Stone Ridge had reported that its ILS and reinsurance assets reached just over $5 billion for the first time by 31st October 2016, but now the managers total net assets across the two reinsurance linked mutual funds it operates have increased by another 9%, reaching almost $5.5 billion ($5.493bn to be precise).
As in previous quarterly periods, Stone Ridge’s interval style mutual ILS fund has driven the majority of the managers’ growth in its ILS assets, with the Stone Ridge Reinsurance Risk Premium Interval Fund growing by almost 23%, from the $3.496 billion reported at the end of October 2016 to reach $4.29 billion by the end of January 2017.
The Stone Ridge Reinsurance interval fund remains the dominant source of participation in the reinsurance market for the investment manager, with the majority (77%) of its assets invested in reinsurance sidecars and other collateralised reinsurance arrangements. 11.7% are invested in event-linked bonds, so catastrophe bonds and private cat bonds, while 5.2% are invested in other ILS funds, solely those managed by Aeolus Capital Management, and the remainder in short-term investments that aid liquidity.
During the last quarter Stone Ridge closed down its lower risk and return Stone Ridge Reinsurance Risk Premium Fund, with investors shifting into its Stone Ridge High Yield Reinsurance Risk Premium Fund, completing the planned consolidation of the two ILS strategies.
The consolidation of these strategies has resulted in a smaller fund, which we believe is due to some investors shifting into the Stone Ridge Reinsurance interval fund instead.
At the 31st October 2016 the two Reinsurance Risk Premium Fund’s had combined assets of almost $1.56 billion. But at the 31st January 2017, the remaining High Yield Reinsurance Risk Premium Fund had assets of just over $1.2 billion.
The Stone Ridge High Yield Reinsurance Risk Premium Fund remains largely focused on catastrophe bond investments, with almost 87% of its assets invested in event-linked bonds, and the remainder in reinsurance sidecars or other private collateralised reinsurance transactions.
Stone Ridge continues to experience impressive growth in its reinsurance linked investment strategies. With another $2 billion of assets committed to a post-event fund strategy as well, the mutual fund manager stands well-positioned to maintain the influence it is building in reinsurance and ILS markets.