A contact tells us that Finnish pension insurer, Veritas Pension Insurance, is seeking to increase the percentage of its investments which are in truly alternative asset classes as they try to find investments with returns that are uncorrelated with the rest of their investment portfolio. Veritas have started a search for an investment manager who can help them achieve this diversification.
One of the alternative assets they are looking to expand their investments in are insurance-linked securities. Veritas Pension Insurance invested almost $10m into insurance-linked securities at the start of 2011, citing the uncorrelated nature of ILS to their typical investments of real estate, fixed income assets and equities. It seems this was a test investment which they now plan to grow once they find the right manager to get deeper into ILS with.
Pension funds and insurers are showing increasing interest in insurance-linked securities and catastrophe bonds as an asset class which will help them to diversify their investment portfolio and achieve a percentage of uncorrelated returns. This interest seems to be growing due to the uncertainty in the traditional financial markets, particularly with equities.