Twelve Capital’s ILS assets rise 33% to $2.4bn on cat bond fund growth

Twelve Capital Management, the Zurich-headquartered insurance-linked securities (ILS) and reinsurance linked investment fund manager, has significantly increased its insurance-linked assets under management this year, thanks to very strong growth of its UCITS catastrophe bond fund strategy.

We highlighted back in June just how quickly the Twelve Capital Cat Bond UCITS fund had been growing in our analysis of the UCITS cat bond fund market.

Having grown by over 150% in a year, it’s now apparent that the growth in cat bond assets managed has been the main driver of Twelve Capital’s impressive growth in insurance-linked securities (ILS) assets under management over the course of this year.

In 2021, up to the end of June, Twelve Capital has increased its ILS assets under management by one-third.

At the end of December 2020, the investment manager counted $1.8 billion of ILS assets.

By June 30th 2021, that figure had increased to $2.4 billion, largely due to growth in the UCITS cat bond fund strategy.

Catastrophe bond funds have proven extremely popular in the last year for several reasons.

Partly the growth in UCITS cat bond fund assets has been helped by continued investor interest in cat bonds as a low correlated asset with liquidity and reasonable transparency.

But another significant contributor has been the fact cat bonds faced far fewer losses than collateralised reinsurance and private ILS strategies, while the losses cat bonds did face were largely at the expected level.

This has helped to build investor confidence in catastrophe bond investments and raised appetite to deploy capital there, while some investors have also sought to switch money from private ILS funds into cat bond strategies.

Twelve Capital itself manages private ILS fund strategies as well, but these appear to have remained relatively static over the first six months of 2021, reflecting the shift in ILS investor appetites.

Catastrophe bonds now make up more than half of Twelve Capital’s ILS assets, which is a shift from a few years ago when private ILS were the more dominant form of reinsurance-linked investment at the manager for a time.

High levels of catastrophe bond issuance have also helped to drive investment opportunities, giving managers like Twelve Capital the ability to open funds that may previously have been shuttered at times and accept new inflows.

This has also been a factor in driving cat bond issuance, as the availability of capital has contributed to keener pricing of catastrophe bond backed reinsurance coverage, helping to drive strong execution for sponsors.

Twelve Capital’s overall assets under management, across its cat bond, private ILS, debt and equity strategies, as well as its Best Ideas strategy that invests across insurance and reinsurance-linked assets, now stands at $3.9 billion as of the middle of this year.

View details of dedicated ILS fund managers and reinsurers offering ILS style investments in our Insurance-Linked Securities Investment Managers & Funds Directory.