8 hours ago
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Quaestio Capital SGR S.p.A., an Italian asset manager based in Milan, has launched its first insurance-linked securities (ILS) fund strategy and has raised €130 million for it, with a plan to invest across catastrophe bonds and private ILS arrangements through a multi-manager, fund-of-fund allocation approach.
The Quaestio Insurance Linked Securities Allocation Fund will combine both listed and private instruments, the investment manager explained, with the goal being to provide a single strategy that has broad access to returns from across the entire ILS sector.
The fund-of-funds strategy will adopt a multi-manager approach to accessing the ILS market, which it believes will help to add diversification within it, while Quaestio also says it will have low management costs.
The strategy is being managed by portfolio manager Davide Saccone, Head of Investment Solutions & ESG at the company, and Quaestio has explained that it already has €130 million of assets under management in the ILS fund.
Catastrophe bonds, collateralized reinsurance and industry-loss warranties (ILWs) are all in scope for the fund, with allocations made via a number of specialist ILS managers, we understand.
The Quaestio Insurance Linked Securities Allocation Fund is an open-ended alternative investment fund (AIF) structure and the strategy will target an expected loss of between 2% and 3%, in terms of the level of risk exposure investors could expect to achieve through this ILS fund-of-funds.
While there is an initial focus on the Italian market, the Quaestio ILS Allocation Fund will also be open to foreign investors via Luxembourg, we are told.
The company sees an ILS fund strategy as a valuable addition to its offerings of alternatives fund strategies for institutions and qualified investors, as well as UCITS strategies for high-net retail money.
The Quaestio Insurance Linked Securities Allocation Fund will be targeted at ultra-high net worth investors, who Quaestio believes will benefit from the decorrelation ILS can offer, as well as institutional investors that target broader, alternative distribution of their assets and attractive returns.
Christian Prinoth, Chief Investment Officer at Quaestio Capital SGR, said on the launch, “The bond market linked to insurance contracts has grown by double-digits over the past 20 years, now exceeding $50 billion globally. This asset class has experienced exceptional growth in recent years and the outlook points to a consolidation of this trend.
“Over the years, these allocations have gradually become a stable component of Quaestio’s strategic allocations. It allows you to balance yields and offer an additional engine of performance, unrelated to traditional equity and bond risks.
“Quaestio has decided to offer access to this market through a multi-manager solution that allows you to invest in the asset class by benefiting from diversification and low management costs.”
Alberto Massa, Head of Sales & Marketing at Quaestio Capital SGR, added, “Insurance-linked securities (ILS), of which cat bonds are a subset, promote a proactive approach to the prevention and mitigation of insurance risks, while also encouraging more responsible environmental management. This helps to strengthen systemic resilience, which is crucial to addressing climate change and sustainably managing extreme events.”
Fund-of-fund, or multi-manager strategies, are very interesting in catastrophe bonds and ILS, as if the fee structure can be kept accommodating then there is an enormous amount of value to be gained by identifying specialist managers for different segments of the ILS market, with a goal to deliver, across the market positions taken, a more diversified strategy and deployment of capital.
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