The New Zealand Superannuation Fund (NZ Super Fund), one of the government pension investment providers, has added to its insurance and reinsurance linked investments again in the last year, with a doubling of its allocation to investment manager Elementum Advisors, seemingly all in catastrophe bonds.The New Zealand Superannuation Fund (NZ Super Fund) has been investing into a range of insurance and reinsurance linked assets for a number of years, with allocations to life settlements, an insurance run-off strategy, catastrophe bonds and collateralised reinsurance.The cat bond and collateralised reinsurance investments are in two mandates with specialist insurance-linked securities (ILS) fund managers Elementum Advisors and Leadenhall Capital Partners.The fund began allocating to ILS back in 2010, when it .

The fund then allocated to Leadenhall for the first time in 2013.In 2014 the NZ Super Fund added its first life settlements allocation, through Apollo Global Management, then adding a second life settlements allocation in 2017.Finally, in 2020, the pension added an allocation to insurance run-off business through asset manager Carlyle and this investment is actually into run-off specialist reinsurer Fortitude Re.

So it’s clear the NZ Super Fund has a strong appetite for insurance-linked returns and as of the end of June 2021 the total value of all these positions was almost NZ $1.6 billion.The life settlements positions amount to NZ $386 million at June 30th 2021, slightly down on the prior years NZ $422 million.The Carlyle insurance run-off allocation was valued at NZ $437 million at June 30th, up from NZ $377 million a year earlier.

Meanwhile the investment in ILS fund manager Elementum Advisors has doubled, reaching NZ $444 million at the middle of this year, up from NZ $222 million at June 30th 2020 and NZ $237 million at December 31st, suggesting this fresh ILS investment allocation was made in 2021.The Leadenhall Capital Partners allocation stood at NZ $332 million at the mid-point of 2021.The increase in allocation to Elementum Advisors appears to have been largely into a catastrophe bond strategy, as the NZ Super Fund disclosed that the value of its cat bond related holdings rose from just under NZ $222 million at June 30th 2020 to reach NZ $438 million at the middle of 2021.

Thee life settlements investments make up 0.7% of the NZ Super Fund’s assets, the insurance run-off allocation is another 0.7%, the Elementum Advisors allocation 0.7% and the Leadenhall allocation 0.6%.So in total, investments into insurance and reinsurance related assets made up 2.7% of the NZ Super Fund as at June 30th 2021.So the NZ Super Fund’s appetite for catastrophe bond investments has clearly continued to increase over the last year, while its balanced-approach to investing across insurance and reinsurance sees it generating returns from P&C reinsurance through the ILS fund managers, life insurance and also P&C run-off business as well.

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