Hiscox expects more ILS outflows in ’24, counters with new instruments
Hiscox will likely see continued outflow of investor funds from its array of ILS instruments in 2024, although fund raising for 1.1 renewals and a handful of new instruments including a cat bond fund offer hope for some offsetting flows in third party capital, Hiscox CEO Aki Hussain has said.
“For 2024, I expect continued outflows from ILS, but we've also started to see new money coming in,” Hussain told his company's 2023 earnings call, with caveat that new flows are “not material” yet against the total flow story. “No million dollar checks for the moment,” he said.
Assets under management in Hiscox ILS fell from $1.9 billion at end-2022 to $1.8 billion at end-2023, despite $140 million in new capital ahead of the January 2024 renewals, including capital from new ILS investors and a newly-launched side-car, management said.
Another $270 million headed out the door in early 2024 in what Hiscox is calling a "planned capital return" to take the AuM tally down towards $1.6 billion.
To counter outflows from core ILS vehicles, Hiscox Re & ILS also launched a cat bond fund in January “to diversify our ILS funds’ product offering,” management said.
“We have several strings to our bow in our Re & ILS business in terms of how we manage that third party capital base,” Hussain said. “We have a multitude available to us,” he said of hopes AuM “may be balanced with some inflows.”
Hiscox Re & ILS business draws on several sources of capital ranging from Hiscox own funds to third-party capital through mechanisms including quota share partnerships, ILS funds, and more recently the side-car and cat bond fund. The larger capacity has remained more flat as Hiscox offsets by increasing Hiscox’s own allocation of capital and by a “significant increase” in ceded quota share capacity.
“We will supplement with our own capital” if the quality of market opportunities holds, Hussain said.
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