SWITZERLAND - Twelve Capital, an insurance-related investment boutique, has completed its spin-off from alternative investment manager Horizon21.

The Switzerland-based company specialises in insurance-related investments such as insurance-linked securities (ILS) and insurance debt investment strategies.    

Twelve will launch two new funds, domiciled in Luxembourg, in early October, and at that time, assets under management are expected to be in excess of $100m (€78.6m).  

The Twelve ILS fund will focus on liquid ILS strategies, such as catastrophe bonds and mortality bonds, while the Twelve Insurance Bond fund will focus on bonds issued by European insurance companies.

Amsterdam-based XS Investments, an advisory and placement firm for alternative investment managers and a minority shareholder in Twelve, will manage distribution.

Urs Ramseier, managing partner at Twelve, said Horizon21 recently decided to become a family office and no longer offer third-party asset management.

The ILS team, which had been at Horizon21 for three years, took the opportunity to do a "friendly spin-off".

Ramseier said the separation of liquid and illiquid investments was one thing that set Twelve apart from many of its competitors.

"We keep those strategies separate to avoid a liquidity mismatch in the event of redemptions," he told IPE.

"We separate the private transactions from the more liquid and traded ones, although it can have the same underlying exposure."

Oscar Pesch, a partner at XS Investments, added: "We have spoken with a lot of pension funds about ILS, and many of them are still in the educational phase.

"But for those that decide they want to move into this asset class, they usually want to move into the more liquid space."

Ramseier said the ILS market had grown in recent years, with a large number of bonds issued and active trading in secondary markets.

He said there was also a large market for private reinsurance transactions that had so far been mostly untapped.

"There is high demand for investments such as insurance-linked securities given their diversifying characteristics and fixed income investments in hybrid insurance debt," he said.

"However, these interesting investment opportunities require specific insurance insight, and it is this dedicated knowledge that will be provided by our team."

Twelve currently has an investment team comprising eight experts in the insurance industry, making it the largest in Europe.

The new funds will carry a management fee of 125 basis points, with no performance fee on the Twelve ILS fund.
 

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