Securis Investment Partners (Securis), specialised in insurance risk-related assets, has launched its first Ucits-compliant strategy, the Securis Catastrophe Bond Fund.
The fund will invest in a portfolio of catastrophe bonds and will be diversified across a range of securities with exposure to catastrophe event risk in different geographies.
The strategy is a sub-fund of Northill Global Funds ICAV and seeks a net return of USD Libor + 4-5% with low correlation to more traditional asset classes.
Securis expects continued growth of insurance-linked securities.
The firm pointed out that catastrophe risks, driven by increasing coastal urbanisation and more volatile climate trends, mean reinsurance capital shortfalls continue to widen.
“The largest peak perils such as US hurricane and earthquake will continue to drive the ILS market, however, new perils such as terrorism, cyber risk and flood are emerging which will serve to augment growth in the ILS market,” Securis argues.
The firm also sees opportunities in regulatory changes for the sector, assessing insurers and other buyers of reinsurance options would make greater use of the capital markets to meet their risk requirements.
Rob Procter,CEO of Securis, commented: “Cat bonds have continued to achieve uncorrelated returns, demonstrating their resilience to financial market factors. The low yield environment and recent unstable market conditions for traditional assets have shown that cat bonds bring valuable risk diversification benefits to a broader investment portfolio.
“The asset class continues to offer long-term investors a compelling source of diversifying returns compared to many other investments.”
Procter believes the cat bond market has reached a state of maturity making this an opportune and exciting time for Securis to bring its first Ucits-compliant fund to market.
“So doing enables us to make best use of our strong cat bond market presence and leverage our existing analytical and portfolio construction capabilities, whilst broadening our investor base.
“As the supply of collateralised protection via cat bonds continues to prove attractive to both existing and new buyers of reinsurance protection, the application of ILS is widening as a risk transfer solution for issuers and investors alike. We believe that ILS will continue to favourably compensate investors for the risks they take on,” Procter said.
Established in 2005, Securis had around $3.5bn in assets under management as at 31 December 2015.