UK asset manager Schroders has strengthened its insurance-linked securities coverage with the launch of the Schroder Life ILS fund that will invest in life insurance-linked securities (ILS). The strategy is due to be run across several funds/mandates in closed-end vehicles with a 10- year maturity.
Some $750m of committed capital were recorded for the launch of the fund, exposed to a wide spectrum of life and health insurance risks, primarily relating to value of in-force (VIF) transactions, mortality, morbidity (health), and lapse risks.
Schroder Life ILS will be managed by Daniel Ineichen, head of ILS at Schroder Investment Management (Switzerland) AG. With his team, they will be supported by Zurich-based boutique Secquaero Advisors, the firm’s exclusive adviser regarding origination, structuring and transaction monitoring of ILS related investments.
Daniel Ineichen, head of ILS Portfolio Management at Schroders said: “These new life specific strategies offer our clients a new class of insurance linked investments that provide attractive risk-adjusted returns that are both diversifying to traditional asset classes and to other more common ILS investments such as catastrophe risk. The longer durations and amortizing nature of many transactions provide our clients with assets that are well suited for matching long-term liabilities, such as pension liabilities.”
Scott Mitchell, head of the Life ILS team at Secquaero Advisors commented: “The additional capacity from investors, combined with a fund structure that caters for the illiquidity and duration profile of complex life ILS transactions, means that Schroders is ideally positioned to support our transaction partners on strategically important structured life trades.
“The launch is particularly timely in the context of the evolving regulatory environment, which is driving an ever-increasing focus from insurers and reinsurers on active management of their risks, capital and liquidity.”
Dirk Lohmann, chairman and CEO of Secquaero Advisors, added: “The launch of Schroders’ life ILS strategy represents a significant step in extending Schroders’ overall ILS offering. The ILS team has been active in the life insurance market since the launch of our first ILS fund in 2008, contributing to the ongoing success of Schroders’ blended ILS (life and non-life) strategies.
“The team has also been involved in some of the most innovative structured life transactions in recent years. Through our strong industry relationships and longstanding experience we believe we have great access to private VIF deals and are able to source and structure a large variety of them.”
As at 30 September 2017, Schroders had €488.3bn in assets under management.