UK-headquartered alternatives manager, Leadenhall Capital Partners, has hooked up with Australian multi-boutique firm, Bennelong Funds, to market institutional-grade insurance-linked strategies (ILS) on both sides of the Tasman.
Under the just-inked agreement, Bennelong will distribute the Leadenhall products to institutions in Australia and NZ, where the specialist manager already has at least one large client.
Leadenhall won a $275 million catastrophe bond mandate with the NZ Superannuation Fund (NZS) in 2013 but the business also has life insurance-linked, reinsurance and private credit products on its menu.
The NZS uses Elementum for cat bonds, too, while it appointed Apollo Global Management to a US life settlements portfolio in 2014 (adding a further allocation in 2017).
But while institutions such as NZS and the Government Superannuation Fund have long been supporters of insurance-linked investments, the alternative strategies remain rare in local portfolios – although consultancy firm, MyFiduciary, has recently written a paper on cat bonds.
The Bennelong-Leadenhall deal should raise the profile of insurance-linked strategies in general in Australasia amid a growing demand for uncorrelated assets.
According to Bennelong chief, John Burke, ILS allocations can help investors diversify risk away from traditional markets and economic conditions.
“Insurance-linked securities are in a sweet spot, with attractive spreads and strong potential growth, and can be an excellent diversifier for portfolios,” Burke said in a release.
“Leadenhall has an experienced team and a strong reputation in this asset class, and we’re looking forward to working together to bring this in-demand product to more of the Australian and New Zealand market.”
In a July media interview, Leadenhall chief, Luca Albertini, said the now almost US$5 billion manager was seeing growing demand for ILS strategies beyond its typical institutional client base amid favourable conditions for the asset class.
“We have traditionally been focused on pension fund investments, and what we have seen now is the entry of money markets and other types of investor, attracted by the particularly high risk margin and the absolute return also being higher than it has been for a long time,” Albertini said.
Excluding Leadenhall, Bennelong represents five boutique managers including 4D Infrastructure, Quay Global Investors and Skerryvore Asset Management. The Edinburgh-based Skerryvore landed an emerging markets mandate with the Tauranga charitable fund, TECT, earlier this year under the advice of new consultant, Frontier.