Twelve Capital adds $400m to UCITS cat bond fund in 18 months

Twelve Capital, the Zurich headquartered insurance and reinsurance linked investment fund manager, has now raised almost US $400 million for its UCITS catastrophe bond fund strategy in just 18 months.

The ILS fund manager said that the investor inflows to its UCITS cat bond fund are coming thanks to distribution activities taking place across Switzerland, Germany, Netherlands and the UK.

Twelve Capital manages roughly $4 billion of ILS and other reinsurance linked assets and recently said that it is to focus on the growth of its own-brand ILS funds, having previously managed white label cat bond fund strategies for private banks in Switzerland.

Now, Twelve Capital is seeing success in raising new funds, helped by a strong track record across the recent two years of challenging market catastrophe losses.

Despite this challenging market environment, Twelve Capital said that its liquid Cat Bond strategies have delivered positive investment performance in 2019 year-to-date.

Some cat bond funds have faced challenges with returns in 2019 due to ongoing loss creep and further impacts thanks to the triggering of additional cat bonds, such as the Peruvian earthquake bond issued for the Pacific Alliance.

Going forward, Twelve Capital said that as an independent investment manager it is looking to broaden its activities into other markets such as France and the Nordics and, potentially, outside Europe as well.

Florian Steiger, who is responsible for Twelve Capital’s Cat Bond strategy, said, “The recent repricing in Cat Bond spreads has allowed new investors to enter the market at a very attractive time. Meanwhile, existing clients have been able to increase their allocation to the asset class. These inflows have allowed for the purchase of Cat Bonds in primary and secondary markets during recent phases of volatility, which has been of benefit to the strategy’s overall risk-return profile.”

“Twelve Capital is a leading manager for liquid Cat Bond strategies for professional investors with offerings both in UCITS and managed account format,” added Urs Ramseier, CEO and CIO. “This recent demand shows the continued growth and recognition of Twelve Capital in the ILS investor space.”

Investor appetite for catastrophe bond investments in reinsurance remains high it seems, helping managers like Twelve Capital to boost their asset base.

The market needs to respond to this appetite, as supply of risk remains key for the catastrophe bond investment market in order to satisfy demand from institutional investors worldwide.