27 February 2013ILS

A change of guard at ILS Capital Management

Don Kramer’s Bermuda investment management company, ILS Capital Management has announced senior personnel changes as it develops its presence in an increasingly buoyant Bermuda ILS sector

ILS Capital Management has appointed Tom Libassi as vice chairman and Paul Nealon as chief risk officer.

Libassi is a member of the firm’s investment committee and is responsible for all aspects of the firm’s global business development including discussions with capital providers, investors and other key strategic relationships.  Prior to joining ILS Capital Management, Libassi was a managing director of strategic value partners where he focused on US business development and strategic relationships.

Nealon is the vice chairman of the investment committee and is responsible for all aspects of the firm’s risk management process including portfolio risk exposures, compliance and counter-party risks.  Prior to joining ILS Capital Management, Nealon was chief investment officer and chief risk officer at Ariel Holdings where he was responsible for directing their investment and risk processes.

Jerome Faure, formerly chief underwriting officer at the firm will be leaving.

Addressing the state of the ILS market, Bermuda:Re spoke with Tim Tetlow, president and chief operating officer at ILS Capital Management about the positive and  ongoing growth experienced by those in the ILS space.

How buoyant is investor interest in the ILS universe?
Interest in ILS has exploded recently as institutional investors have increasingly recognised the short duration, low correlated and relatively high yield opportunities that ILS represents. In the last year ILS Capital informally estimates that $8 billion has been added to the assets under management of specialist ILS managers, making this a decidedly buoyant market.

How can ILS managers look to gain traction in the market?
The total opportunity set in the ILS universe is still relatively large in the context of the funds deployed through specialist ILS managers. Our view is that traction is gained by providing differentiated service to both our investors, the various intermediaries and the issuers of ILS.

For investors this includes offering consolidation services that allow investors using multiple managers to understand their overall exposures across their managers, making recommendations on enhancing their risk-return profile and sharing ReSolution, our proprietary real-time multi-model portfolio management system. For intermediaries and the issuers of ILS we aim to be extremely responsive by providing price indications on proposed structures and alternative structural suggestions in a timely manner at competitive prices.

How are firms like ILS Capital Management looking to set their offering apart from others in the market?
ILS might appear to be a commodity market, however if you look at the flights of capital that have historically entered the reinsurance space it is abundantly clear that it is not. In the class of 1992, for example, RenaissanceRe and Tempest Re substantially outperformed their peers and similar outcomes were achieved by the classes of 2001 and 2005. The key to success is capital management and outperforming in high loss years.

Our insights from a management team with over 70 years of reinsurance experience and 55 years of investment experience is that this outperformance can be distilled down into three factors: investment sourcing, underwriting expertise and risk management.

We are located in Bermuda, the global centre for catastrophe reinsurance and have deep relationships with the issuers of ILS and intermediaries. Underwriting expertise and risk management are an integrated process that we centralize through ReSolution, our proprietary real-time multi-model portfolio management system. ReSolution also allows us to analytically overlay our underwriting expertise over output from third party catastrophe models and construct outperforming portfolios for investors.