Catastrophe bond fund news

Once again, the insurance-linked securities (ILS) market is demonstrating the value of making investments into relatively uncorrelated assets, as some catastrophe bond and ILS fund strategies have been delivering benchmark-beating returns for the first few months of 2022, against the grain of many other asset classes.

A recently launched US mutual investment fund with a core focus on catastrophe bonds, is expanding its investment scope to include more types of insurance or reinsurance assets prior to its full launch, with the Ambassador Fund adding to its prospectus so it can take opportunities to begin gaining traction.

GAM Holding AG, the parent company, reported yesterday that its GAM Star Cat Bonds fund strategy, the one managed by Fermat Capital Management, has continued to be one of the few bright-spots in its fixed income investment offering, even during a particularly volatile quarter.

Assets under management (AUM) of the main UCITS catastrophe bond funds as a group increased during the first-quarter of 2022, but perhaps a little surprisingly growth has slowed somewhat, despite new issuance having been buoyant.

With catastrophe bond spreads having widened in recent weeks due to market dynamics and interest rates forecast to rise, it’s currently possible that a catastrophe bond fund investment could yield as much as 8% to 9% next year.

Tenax Capital, the London based hedge fund manager that was founded by CEO Massimo Figna and now counts FOSUN as its major shareholder, believes that catastrophe bond pricing and terms & conditions will remain attractive through 2022, while more inflows from generalist fixed income investors are possible.

Schroders, the global asset manager with a specialist insurance-linked securities (ILS) investment management business, has updated the investment strategy and policy of its flagship UCITS catastrophe bond fund, the Schroder GAIA Cat Bond, to incorporate specific ESG and sustainability features.

The main UCITS catastrophe bond funds as a group lifted their assets under management (AUM) significantly during 2021, to a new high of just over US $8.64 billion, representing 28% growth in AuM year-on-year.

Alpina Capital, the asset manager that took over the management and distribution of the Falcon Private Bank catastrophe bond funds, has now been approved as a manager of collective assets by FINMA in Switzerland.

As we’ve been documenting in recent weeks during our normal coverage of every new issuance, there is clear evidence that catastrophe bond funds and investors are holding the line on pricing in recent weeks, with more recently priced cat bond tranches seeing their coupons rise, rather than fall.