PGGM calls for more data and transparency in the ILS market –

PGGM, the Dutch pension investment manager that is the largest single allocator to the insurance-linked securities (ILS) market on behalf of end-client pension PFZW, has issued a call for ILS fund managers to provide more data and transparency.

Responding to the recent study published by Swiss based alternative asset advisory specialist SIGLO Capital Advisors AG, members of PGGM’s ILS investment team have praised the work and said they’d like to see ILS funds publishing more standardised data of this kind.

We covered the SIGLO study last week and you can download a copy of it via our article here.

One conclusion of the analysis SIGLO undertook is that the landscape of insurance-linked securities (ILS) fund products is relatively broad and diverse, even though the majority are crowded into similar sizes and target similar levels of risk, meaning that, for investors, there is value in considering multiple ILS allocations.

PGGM is a very good example, with numerous allocations to different ILS funds, reinsurance sidecars and other partnership vehicles with reinsurers and ILS asset managers, all amounting to around US $8.35 billion deployed to the space at the last count.

Patricia Voets-van Dam, Senior Investment Manager in the PGGM ILS team and Anna Bak, Senior Policy Advisor at PGGM, wrote that the work by SIGLO is, “Great news for the market and a significant step forward towards a more transparent and robust ILS universe.”

They expanded to say, “Transparency and comparability are therefore crucial for further development of ILS as an appealing investment.

“As an ILS investor, we highly appreciate this initiative.”

With ILS a “fast growing but still relatively nascent asset class” the PGGM authors say that there remains little knowledge and a lack of public data about ILS.

The data SIGLO shared in its analysis lays bear the range of options available to investors in ILS, but also the concentration of strategies around certain perils and risk levels.

“This is very insightful for the investors,” the PGGM team said.

Going on to state, “From our investor’s standpoint, we would like to see more fund managers providing such insights and extend their standard reporting with additional data, like what is shown in the article.

“Such data will undoubtedly help investors to better understand ILS and to increase their participation in the market.

“With over USD 100 bn in size, the ILS market has a significant contribution to overall reinsurance capital, and it is expected to grow further. Such growth will undoubtedly demand more of the in depth analysis, such as SIGLO’s study, which will contribute to the overall improvement of the ILS products and development of the robust market.

“This can only bring positive outcomes and increase investors’ confidence in the asset class.”

It’s encouraging to see this call for transparency from PGGM, as this is something we’ve been urging the industry to provide for more than two decades.

Still, we speak with investors almost every day who find ILS an opaque asset class and are crying out for information about it to deepen their understanding. So, the need for more data to be released, standardised and made available to the global investor community is clear. PGGM’s call can only help in this.

Also read: ILS fund diversity makes multiple ILS allocations a consideration: SIGLO research.

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