August 28, 2014

The rise of the insurance linked fund

For hundreds of years reinsurance was sold by reinsurers. In the early 2000s, a handful of specialist fund managers began to construct portfolios of catastrophe bonds on behalf of investors looking for returns that were largely uncorrelated to the stock market. A few pioneering firms worked over the next decade to establish the credibility of the asset class by creating structures that appealed to both investors and buyers of protection.

In the past few years, the insurance linked fund industry has ballooned to more than $40 billion of assets under management and established itself as a mainstream asset class. And, as the mandate of insurance linked funds has broadened to include other investments such as collateralised reinsurance, these fund managers have begun to encroach significantly on the reinsurance market.

Like much of the financial services industries, the sector is concentrated in a handful of locations. The map below shows the approximate size of the major insurance linked fund managers by the location of head office. Each colour denotes a different fund. Bermuda and Switzerland are the clear leaders in both numbers and size of funds with the UK and the US also hosting significant numbers of fund managers.

For the full report and to view the interactive map click here to be re-directed to Insurance Linked


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