February 26, 2024


We understand that Aeolus Capital Management Ltd., a Bermuda-based manager of reinsurance and insurance-linked securities (ILS) investment funds, has been benefiting from an inflow of new investor clients ahead of a mid-year renewal , increasing its overall assets under management (AUM) to $3.9 billion.

Fengshen Capital Management LogoAeolus is the latest mortgage reinsurer and retrocession asset manager this year to benefit from new investor capital flowing into its fund strategy.

As reinsurance and retrocession rates rise amid tough market conditions, confidence is returning and investors are increasingly placing active The capital flow of the fund is allocated to the fund strategy.

A year ago, in mid-2022, Aeolus Capital Management’s AUM was around the $3.5 billion mark.

Now, the manager’s assets under management have grown by more than 11% in a year to $3.9 billion, suggesting that Aeolus is returning to its previous highs (about $4 billion in 2018).

This growth places Aeolus Capital Management firmly in our top ten list. ILS Fund Manager Directory.

It was another encouraging sign for the overall insurance-linked securities (ILS) market, as investors backed mortgage strategies that invest in peak exposure to natural catastrophes.

Aeolus is a specialist in private or mortgage reinsurance and retrocession in markets that have been hit hard in recent years by the frequency and severity of catastrophic events.

But now, with the overall hardening of the reinsurance market, higher pricing appears to be more commensurate with risk, and due to better terms and conditions (including higher attachment points) improving portfolio structure, target returns like Fengshen are reaching Moderate to Higher Level Strategies The goals pursued by ILS strategies are now gaining more and more attention from investors.

Recall that we reported in 2022 on some ongoing product restructuring and repositioning at Aeolus Capital Management as the firm looked to improve contract terms and better shape potential portfolio returns for investors.

Similar moves are now benefitting ILS fund managers as they begin to be able to demonstrate some of the product and portfolio improvements they’ve been making and the potential for higher returns in their funds in 2023.

It is also being helped by investors showing increased interest in ILS strategies, as many endowment, foundation and family office types of investors are seeking higher returns than the cat bond market can provide , thus turning to a more private and collateralized ILS fund strategy.

At Artemis, we’ve seen this type of investor have the most interest in ILS as an asset class for at least a decade, and it’s clear that interest has also generated positive flows for ILS investment managers.

A return to asset growth in 2023 is a very positive sign for many ILS fund managers, although investors would like to see positive inflows without any significant weakness in future pricing.

To view information on the many specialized ILS fund managers and reinsurers offering ILS style investment opportunities, visit our website Directory of insurance-related securities investment managers and funds.

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