Plenum, a Zurich-based insurance-linked securities (ILS) asset manager, has launched a new high yielding ILS fund that will invest in collateralised reinsurance transactions, to be sourced and underwritten by Bermuda’s boutique reinsurer Sequant Re.
The new fund will complement Plenum’s current ILS offering and bring to the investment community access to a greater variety of reinsurance transactions than traditionally offered in the ILS market.
Rainer Gruenig, chief executive officer (CEO) of Plenum Investments, said: “Many of the current ILS investment funds are highly exposed to peak risks, such as US wind. They have limited access to invest in other lines of business.
“There is an obvious need for a balanced and diversified approach to investing in reinsurance as a complement to existing strategies. We are delighted to partner with Sequant Re and bring to the market an ILS offering that will add value to investors.”
Guy Cloutier, CEO of Sequant Re, added: “The biggest opportunity for ILS in the future lies in opening up more of the reinsurance market to collateralised solutions and increasing the diversification of transactions available to ILS investors. The reinsurance landscape is changing rapidly and this partnership will allow the two fully independent firms to bring more investment options to investors.
“We are thrilled to be working with the Plenum team who bring to the table capabilities that nicely complement our reinsurance operation.”
Investors in the new ILS fund will benefit from Plenum’s track record and expertise as an ILS fund manager and also from the efficiency and flexibility of Sequant Re’s segregated cell structure. The fund will also benefit from Sequant Re’s expertise in sourcing, underwriting and modeling a broad range of lines of business and types of reinsurance contracts that are not commonly accessible to many ILS managers. This will enable the fund to generate attractive returns, both absolute and risk-adjusted.
The two firms have adopted a transparent process for the selection and underwriting of risks that combine the respective skills of both companies working closely together. The common Investment Committee sets out underwriting guidelines under which Sequant Re will operate.
Plenum remains in control of selecting and funding transactions with Sequant Re binding risks as capital is allocated. According to Cloutier, “this ensures a high level of transparency and necessary checks and balances for greater investor protection”.
Plenum, Sequant Re, ILS, Insurance, Reinsurance, Rainer Gruenig, Guy Cloutier, Bermuda, Europe