The Metropolis of Zurich Pension Fund has continued to develop its actions as an investor in insurance-linked securities (ILS), rising the dimensions of its funding to now in extra of US $1.15 billion, whereas including new allocations to ILS managers Integral ILS and Tangency Capital within the final 12 months.
After we last reported on the City of Zurich Pension Fund one year ago, its allocation to the insurance-linked securities (ILS) sector, which spans disaster bonds, personal reinsurance and life settlements, was round US $960 million by the tip of March 2024.
On the time, the Zurich Pension Fund (or Pensionskasse Stadt Zürich) had mandates in place with eight funding managers throughout life and P&C reinsurance investments.
Now, the variety of mandated managers has been lifted to 10, with new allocations to privater reinsurance centered ILS funds managed by specialists Integral ILS and Tangency Capital.
Tangency Capital, the quota share centered ILS funding supervisor, was added in Could 2024, whereas Integral ILS was added in December, disclosures from the pension present.
The Metropolis of Zurich Pension Fund has been investing in insurance-linked securities (ILS) since 2017.
It started by allocating to life settlement allocations with Broadriver and Miravast, earlier than including its first P&C ILS fund allocation to Elementum Advisors in June 2019, after which an allocation to a SCOR Funding Companions ILS technique was added in January 2021.
Allocations to ILS methods managed by Schroders, Pillar Capital and RenaissanceRe on the finish of 2021. Then on the finish of 2022, the pension added new allocations to life insurance-linked funding methods managed by Broadriver and Miravast, and at last it made an allocation to a fund managed by Hiscox ILS in September 2023.
Now, with the addition of first Tangency Capital after which Integral ILS, the pension fund has clearly demonstrated its need to develop into the asset class, and it has room to take action.
As of March 2025, the allocation stood at 4.9% of property, which based mostly on simply over 21 billion Swiss Francs roughly works out to be round US $1.15 billion on the final reporting date.
However, 4.9% of general property continues to be just below the optimum strategic allocation goal of 5% for the ILS asset class, in response to the pension, inside a goal vary of a minimal allocation of two.5% and most allocation of 8%.
So, ought to the Metropolis of Zurich Pension Fund elect to, it has the power to deploy as a lot as maybe US $1.9 billion into insurance-linked securities, property & casualty or life associated.
The ILS investments have been performing as deliberate once more within the final 12 months, with the Metropolis of Zurich Pension Fund reporting that they delivered a 9.2% return within the final monetary 12 months.
Calling this a “pleasing contribution” the pension fund additionally famous that this was the identical return because the benchmark it makes use of for its vary of insurance coverage and reinsurance linked investments.
Insurance coverage-linked securities (ILS) beat many different asset courses for the pension within the final 12 months, with the return of its ILS investments solely falling behind main and rising market equities, whereas beating broader hedge fund methods, infrastructure, personal fairness and actual property.
Total the Metropolis of Zurich Pension Fund’s portfolio delivered a 7.5% return within the final 12 months, that means the ILS allocation was a optimistic contributor that raised whole returns for the pension as soon as once more.
