Attractive cat bond pricing & more inflows expected in 2022: Tenax

Attractive cat bond pricing & more inflows expected in 2022: Tenax

Tenax Capital, the London based hedge fund manager that was established by CEO Massimo Figna and now counts FOSUN as its major investor, thinks that disaster bond pricing and terms & & conditions will stay attractive through 2022, while more inflows from generalist fixed income financiers are possible.Tenax Capital released its first insurance-linked securities (ILS) technique, a UCITS certified disaster bond investment fund, the Tenax ILS UCITS Fund, back in 2017.
The Tenax ILS UCITS fund has been managed by previous Swiss Re executive Marco della Giacoma since its launch, but the business also included Toby Pughe as an ILS Analyst in 2015, as it seeks to build on this technique.
At the end of 2021, the Tenax ILS UCITS Fund had lifted its assets under management to simply over EUR 63 million, representing more than 130% growth in assets for the year for what is still a relatively young method.
You can track aggregated UCITS disaster bond fund asset development here.
It stays a smaller UCITS disaster mutual fund, but a growing one and its efficiency stayed attractive in 2021 in spite of the high levels of natural disaster losses that hit the reinsurance and ILS marketplaces.
Tenaxs UCITS disaster mutual fund technique provided a 3.24% return for the full-year 2021, managing to avoid all significant loss occasions and not being affected by typhoon Ida throughout the year.
” The Tenax ILS UCITS Fund continued and delivered a positive return to represent a safe sanctuary from volatility in the rates market and a protection against increasing inflation,” the portfolio supervisor explained in an update.
Adding, “Our disciplined choice procedure and portfolio diversification were essential in reducing losses in what turned out to be a record loss year for global (re) insurance markets. We note the Fund did not suffer any loss as an outcome of Hurricane Ida which was the biggest named storm of 2021.”
Significantly, Tenax has embraced a strategy of seeking to prevent direct exposure to secondary perils as well as having a “concentrate on quality structures and companies,” when it comes to choosing cat bond investments.
The investment manager is bullish about potential customers for the disaster bond market in 2022, particularly as reinsurance rates have actually been on the rise at current renewals.
” We anticipate the prices environment and terms and conditions to remain attractive in 2022,” the portfolio manager wrote, adding that “Pricing in the underlying (re) insurance coverage markets has seen double-digit rate increases, and terms and conditions continue to tighten, specifically for loss impacted organization and aggregate offers.”
The manager expects prices might move at various rates for different exposures, as the marketplace gets used to current loss history.
They discussed that, “Dispersion in prices need to broaden between peak and non-peak dangers as risk premia change on the latter.”
Tenax is also anticipating the cat bond market to be hectic once again in 2022, with a strong circulation of new offers concerning market.
” In terms of new transactions, we expect a healthy pipeline of brand-new disaster bond issuances in 2022, both from ending protection renewals and from first-time sponsors,” they commented.
The Tenax ILS team likewise expect to see more inflows from a significantly diverse financier base that looks to disaster bonds in 2022.
Saying that, “We would not be shocked to see inflows in the market from perhaps generalist set income financiers searching for a hedge to inflation and rates.”
More generalist set earnings financiers and also financial investment supervisors have been progressively allocating to catastrophe bonds recently.
With the possession class using a healthy source of diversified return, the existing economic environment may drive even more of this kind of financier to look at insurance-linked securities (ILS).

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