Investors continue to target reinsurance

Against a backdrop of low interest rates and limited investment returns, investor demand for catastrophe-linked products remains high with yet more vehicles being launched to satisfy this demand.

Stone Ridge Asset Management, a new investment management firm formed in New York by Ross Stevens, a former Magnatar Capital executive, became the latest entrant into this market last week when it announced it was launching two new reinsurance-linked funds.

Shiv Kumar, managing director of structured finance at Goldman Sachs, said money was continuing to flow into the sector from pension, endowments and sovereign wealth funds.

Insurance-linked securities vehicles and reinsurance-linked funds offer investors diversification and yield, making them an attractive investment for the foreseeable future, according to Kumar.

“We expect this level of demand to continue in the near future,” he said.

“As long as interest rates in the global capital markets continue to remain low, we believe that investors will find the risk-return profile in this asset class to be attractive.”