Dutch pension fund plans to boost ILS investments

PGGM, the Dutch pension fund manager overseeing assets of nearly €200 billion ($248 billion), is looking to increase its allocation to insurance-linked securities (ILS), according to a Jan. 26 Reuters report.

Evelien Takken, PGGM’s senior investment manager for ILS, told Reuters in an interview she would like to bump up exposure from a little less than 2 percent of assets under management to 2.5 percent, an increase of around €1.2 billion.

The move comes despite a difficult year in 2017. PFZW, the Dutch healthcare industry pension fund that is PGGM’s main client, reported a loss of around 2 percent on its ILS investments. The fund blamed the heavy hurricane season for the annual loss.

But Takken said that the asset class has returned 7 percent annually for PGGM, including last year’s figures, and now is a reasonable time to increase allocations.

“For next year there’s no increased hurricane activity expected, (but)...you’re rewarded with a better premium for similar risks,” she said.

In various categories of the ILS market, yields have increased in a range from less than 5 percent to almost 20 percent.

She said the company does not have a specific target date to reach 2.5 percent of assets allocated to ILS.

However, the “year after an event [such as a major hurricane] is a good moment to start.”

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