Stockholm (HedgeNordic) – Ress Capital, the Swedish Fund Management company whose focus is insurance-linked securities with an emphasis on the secondary market for US life insurance policies, announced this month that AUM now exceeds USD 80 million for its Ress Life Investments fund A/S, with pension funds, insurance companies and several larger family offices among its largest investors.
Ress Life Investments, which was launched in April 2011 and is based in Copenhagen, now owns over 200 life insurance policies issued by 49 different insurance companies in its portfolio, of which 75%+ have a credit rating of A+ or A++, according to AM Best, the credit rating company. These achievements are against the backdrop of an increase of 32% in the number of transactions in the life settlements market in 2015.
In a comment to Ress Life Investment’s growth, CEO Jonas Martenson (pictured), suggests the strong demand for both single life insurance policies and larger life insurance portfolios has been driven by the search for yield and alternative risk factors, driven by low interest rates and quantitative easing. Demand for life settlement policies is increasing simultaneously with the number of policies being offered for sale.
In addition, Mr Martenson observes an increasing demand from institutional investors adopting factor investing. Because longevity, the main risk in a life insurance portfolio, is highly uncorrelated to the general economy, it is an attractive alternative for anyone seeking risk diversification in order to increase the risk-adjusted portfolio return.
Ress Life Investment’s net return during 2016 (31 August) was +2.19%, which has mainly been driven by an ageing portfolio and insurance policies being paid out.
The Fund’s focus is on selectively buying single policies, with only 2-3% of all policies reviewed being purchased. Purchase is contingent on an independent life expectancy report, all of which contributes to creating a diversified portfolio with attractive expected returns and low sensitivity towards increasing longevity.
