Twelve Capital, the Zurich-headquartered insurance-linked securities (ILS) and reinsurance investment manager, has launched its first parametric ILS fund, working with Lumyna Investments for infrastructure and distribution, and parametric specialist Descartes Underwriting alongside Generali’s Global Corporate & Commercial arm for origination.
The Lumyna – Twelve Capital Parametric ILS Fund will provide investors with diversification, enhanced returns, and de-correlated performance by investing in innovative parametric insurance transactions, the company explained.The fund has been seeded by a leading European institutional investor, with €75 million of committed capital for deployment over time.
The Lumyna – Twelve Capital Parametric ILS Fund has been established as an open-ended sub-fund under the Lumyna Alternative Funds SICAV in Luxembourg, we understand.
Lumyna Investments Limited is part of Generali Investments and the Parametric ILS Fund will leverage its infrastructure, marketing and distribution presence.
Twelve Capital will act as the investment manager to the Parametric ILS Fund, bringing its expertise and portfolio management capabilities from across the full-range of insurance-linked securities (ILS) and reinsurance opportunities.
Notably, Twelve Capital is looking beyond the perhaps best-known are of ILS where parametric structures are most commonly seen, of catastrophe bonds, and has established all-important origination relationships to source private parametric insurance and reinsurance opportunities for the new fund to invest in.
The Lumyna – Twelve Capital Parametric ILS Fund will collaborate with parametric specialist Descartes Underwriting and Generali Global Corporate & Commercial which offers parametric risk transfer solutions.
As a result, the Parametric ILS Fund will benefit from, “Generali’s underwriting excellence and highly rated insurance balance sheet, alongside Descartes’ origination and underwriting capabilities,” the company said.
The Parametric ILS Fund will also invest in catastrophe bond and industry-loss warranty (ILW) opportunities, to
further enhance liquidity and diversification.
Investors have had a strong-interest in parametric risk transfer investments for many years, citing the structures as being perceived as more readily understood due to the greater simplicity of their triggers and payout factors, as well as often more understandable coverage profile, than an indemnity structure.
But, with the majority of opportunities having come via the catastrophe bond market, parametric triggers have only been a smaller component of issuance since that market emerged in the late 90’s. Which means dedicated parametric ILS fund strategies to allocate to have not emerged before, except in private mandate form.
The origination partnerships help to make a pure parametric ILS fund possible and with parametric insurance awareness and uptake accelerating across the globe, it will be intriguing to see how investors respond to this new Parametric ILS Fund launch.
The timing is also opportune for those attending our ILS NYC 2025 conference later this week, as Twelve Capital’s Founding Partner, Urs Ramseier, and the Descartes Underwriting CEO, Tanguy Touffut, are both participating in a panel discussion on the parametric ILS investment opportunity.
This Parametric ILS Fund has an objective to allocate capital to parametric opportunities across natural catastrophe and weather-related risks. It will be actively managed and diversified across opportunities, parametric insurance, private ILS, cat bonds, ILW’s and other derivatives.
Dr. Urs Ramseier, Founding Partner and Executive Chairman of Twelve Capital, stated on the launch, “The growth of the parametric segment and its compelling characteristics present a solid opportunity for investors in ILS seeking strong returns and diversification. Twelve Capital is pleased to partner with industry leaders to create an innovative product that allows investors to benefit from unparalleled investment management expertise.
“Our goal is to enable investors to capitalise on the idiosyncratic features of parametric insurance, complemented by the strengths of the broader ILS segment.”
Dr. Rom Aviv, ILS – Senior Advisor to Twelve Capital, added, “Among many benefits, Parametric Insurance as an investment offers paradoxically a premium for its simplicity. It enhances the IRR for investors by effectively minimizing trapped capital risks.”
Philippe Lopategui, CEO of Lumyna also commented, “The partnership with Twelve Capital marks an important next step on Lumyna’s expansion in the Private Markets arena. The value-add that Lumyna brings as both manufacturer and distributor of innovative investment solutions builds on the foundations established over the past 17 years in the liquid Alts space. We are delighted to partner with such a high pedigree manager as Twelve Capital, and with market leaders Descartes and Generali, which will enable us to provide unique and differentiated access to parametric insurance to our investors.”
Paul Holmes, Head of Distribution at Lumyna further stated, ”There has been a significant level of interest in evergreen, semi-liquid private market solutions over the last few years from a broad spectrum of our investor base. With the launch of the Parametric ILS fund in partnership with Twelve Capital, we believe that we bring a genuinely innovative strategy, with the ability to generate highly attractive risk-adjusted returns, in a framework that does not compromise portfolio construction and liquidity.”
