Our ILS Funds include ILS Diversified Ltd. and Maneki UCITS CAT Bond Fund.
We identify relevant and material physical and transition climate-related risks for each investment strategy and fund we manage.
The products managed by us invest specifically in instruments related to the occurrence of natural catastrophe events. Most investments are therefore impacted by climate risk.
Where relevant, factor the material climate-related risks into the investment management process. For example, we include climate-related risks in the investment philosophy and investment strategies and incorporate climate-related data into the research and analysis process.
Climate risk management is at the core of our investment process. The analysis of ILS investments focuses on the insurance coverage underlying the instrument. We check the insured business sectors (e.g., residential, commercial, industrial, automotive, or specialist insurance) and the geography covered by the contract. We also check the type of events covered (e.g., earthquake, tropical cyclone, storm, forest fire, severe thunderstorm, hail, flood, volcanic eruption, meteorite impact, life, mortality, etc.). The analysis includes checks on the insurer's organization, reputation, underwriting standards, and claims management track record. To quantify the risk, we rely on state-of-the-art stochastic reinsurance modelling systems. These systems allow for managing the risk of loss and evaluating if the insurance risk premium properly compensates investors for that risk.
We also take reasonable steps to assess the impact of these risks on the performance of underlying investments.
We invest in instruments where the economic interests of investors in relation to natural disaster risks are fully aligned with the goals of reducing the negative effects of climate change. We make investments in the insurance sector, which has the lowest carbon intensity footprint of any industry. We focus on peak perils (e.g., earthquakes and windstorms) and try to avoid secondary perils which are more impacted by climate change (e.g., wildfire, flood, severe thunderstorms, tornadoes, hail). In terms of portfolio management, we diversify across multiple regions and perils, which are independent of each other.