Plenum Investments Ltd. has launched an insurance linked securities (ILS) fund, which will invest in collateralized 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, the companies said in a statement.
“Many of the current ILS investment funds are highly exposed to peak risks, such as U.S. wind. They have limited access to invest in other lines of business,” said Rainer N. Gruenig, CEO of Zurich-based Plenum, noting 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,” added Gruenig.
“The biggest opportunity for ILS in the future lies in opening up more of the reinsurance market to collateralized solutions and increasing the diversification of transactions available to ILS investors,” said Guy Cloutier, CEO of Sequant Re, a subsidiary of Sequant Re Holdings Ltd.
The reinsurance landscape is changing rapidly and this partnership will allow the two fully independent firms to bring more investment options to investors, he continued.
“We are thrilled to be working with the Plenum team who bring to the table capabilities that nicely complement our reinsurance operation,” said Cloutier.
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 companies said.
Sequant Re will source, underwrite and model a broad range of lines of business and types of reinsurance contracts, which are not commonly accessible to many ILS managers, said the statement. “This will enable the fund to generate attractive returns, both absolute and risk-adjusted.”
The companies said they have adopted a transparent process for the selection and underwriting of risks. The common investment committee sets out underwriting guidelines under which Sequant Re will operate, while Plenum is 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.”
Source: Plenum Investments and Sequant Re
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