The target allocation range has been reduced for an investment into a Munich Re reinsurance sidecar that features in the insurance-linked securities (ILS) portfolio managed by PGGM, the Dutch pension fund investment manager, on behalf of its end-client Dutch pension PFZW.PGGM has been investing in the Leo Re quota share sidecar structure that is managed by reinsurance giant Munich Re since 2016, on behalf of the PFZW pension.The Leo Re sidecar is a natural catastrophe focused structure, that allows PFZW to partner with Munich Re and share in the risks and returns of its nat cat underwriting on a global basis.PFZW, the pension that funds the investments into insurance-linked securities (ILS) that are managed by the PGGM team, discloses target allocation ranges for each of its ILS investments and at the latest update it is only the Munich Re sidecar that has been adjusted.

The target allocation range for the Leo Re sidecar investment had sat at between EUR 250 million and EUR 500 million through 2022 and 2023, into early 2024., at the middle of 2024 the target investment allocation range for Munich Re’s Leo Re sidecar vehicle was doubled to between EUR 500 million and EUR 1 billion.Now, as of the end of the first-quarter of 2025, the target allocation range for the Leo Re sidecar investment has been halved again, back to the prior from EUR 250 million and as much as EUR 500 million.

Of course, this doesn’t necessarily mean the actual investment made into Munich Re’s sidecar has shrunk by half.It just means it likely now falls into the lower range again, with a downsizing that may just be slight in 2025.There are, of course, a number of possible reasons for this change to the target allocation size range.

It could be due to the fact PGGM has built-out a broad range of catastrophe bond, ILS fund and direct reinsurance partnership investment opportunities over the years, allowing it to flex its allocations across structures to suit itself and the partners it works with.PGGM has been in recent years, as well as building out is Nightingale Re private mandate vehicle, while it has also recently which is managed by Everest specialist unit Mt.Logan Capital Management, Ltd.

(MLCM).So the pension investor has plenty of options available to it.With the reinsurance market softening at this time, it’s also possible that Munich Re could have shrunk its sidecar slightly for 2025, opting to retain a little more of the economics of the property catastrophe reinsurance underwriting and hence the allocation falling below the bottom of the range that had been in place.

In addition, sidecar sponsors and investors work together to identify optimal allocations, to suit both parties risk appetites, so allocations are rarely the same year-over-year.The reduction in the allocation range to the Leo Re sidecar is the first change to PFZW’s ILS allocation target allowances since June 2024, except for the addition of the Mt.Logan managed Scenery Re investment, although it’s worth noting that investment is still not disclosed by PFZW at this time.

Recall that, the insurance-linked securities (ILS) and reinsurance investments portfolio of Dutch pension PFZW, which is managed by pension investment firm PGGM, .While, the latest figure for assets under management, of what continues to be the largest single investor ILS allocation in the market, was for around the US $8.68 billion level as of December 31st 2024.So the allocation remains significant and we suspect this change is simply due to the Munich Re sidecar investment shrinking a little, as both sponsor and investor of Leo Re flex their use of capital, appetite for risk and the partnership size changes as a result.

PFZW has a broad range of allocations to ILS funds, reinsurance sidecars and other joint-venture vehicles in the reinsurance market and at the latest update from the pension the allocation target ranges stand at the levels below, as of March 31st 2025, with only the Leo Re numbers having changed: As stated, , has not been disclosed in the latest update from PFZW.PGGM remains the largest single investor listed in ..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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