Neuberger Berman Insurance-Linked Strategies, the specialist ILS investment management arm of the global asset manager, won a $250 million mandate and immediately funded allocation from giant US state pension plan the Virginia Retirement System at the end of last year.The allocation has been made to a closed-end fund focused on insurance-linked securities (ILS), although its not immediately clear what the underlying asset strategy is focused on.However, the Neuberger Berman Insurance-Linked Strategies team typically allocates to natural catastrophe risk-linked opportunities, with instruments such as industry-loss warranties (ILW) and catastrophe bonds having been the main focus for the investment manager over the years.The Virgina Retirement System is a particularly large US state pension fund.

Back at the middle of 2024, the Virginia Retirement System was the 14th largest public or private pension fund in the United States and the 36th largest in the world.As of June 30th 2024, the Virginia Retirement System counted more than $114 billion in assets under management.We believe this could be the first dedicated ILS asset allocation made by the pension fund, as documents suggest any catastrophe bond or ILS investment exposure was contained within multi-asset diversifying fund strategies it allocated to, at least in the current portfolio.

The $250 million allocation was made in late December and was expected to be immediately funded to the Neuberger Berman Insurance Linked Strategies Fund.The Virginia state pension categorises ILS within its diversifying strategies bucket, which amounted to almost $4 billion in assets as of December.The diversifying bucket is a target for expansion through re-weighting, we understand, being currently underweighted and having a target to become 4% of the Virginia Retirement System’s overall assets.

This ILS allocation with Neuberger Berman has helped the Virginia state pension to increase the diversifying bucket from 3.4% of assets in November, to now 3.8% as of January 2025.With that remaining slightly under-weight, the addition of a managed ILS fund allocation is one area the Virginia Retirement System could grow its diversified allocations, if it so chooses..

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