Healthcare of Ontario Pension Plan (HOOPP) grows ILS allocation 31% in 2021

The Healthcare of Ontario Pension Plan (HOOPP), a large Canadian institutional retirement fund, has expanded its investment allocation to insurance-linked securities (ILS) by roughly 31% in 2021, taking it to C$721 million (approx. US $575m).

The Healthcare of Ontario Pension Plan (HOOPP) began investing into insurance-linked securities (ILS), largely via insurance-linked funds as well as some other reinsurance related securities, in late 2019.

In early 2020, HOOPP employed Bernard Van der Stichele, an experienced ILS and reinsurance sector executive, as a Portfolio Manager for the new Insurance-linked Securities investment allocation.

HOOPP had been shifting from its equities focus into a range of alternative asset classes including insurance-linked securities (ILS), as a way to help soften the blow of the market volatility seen as a result of the Covid-19 coronavirus, making the move into insurance and reinsurance linked investments timely for the pension.

By the end of 2019, HOOPP had allocated roughly C$260 million of assets into insurance-linked instruments, at fair-value.

2020 saw HOOPP building on its ILS investment program, with that allocation more than doubling to reach C$549 million at the end of last year (which was roughly US $440m at the time).

Through 2021, HOOPP has maintained a steady growth strategy for the ILS allocation, lifting it to C$721 million (US 575m) by the end of the year, representing growth of just over 31% in Canadian dollars.

Overall, HOOPP grew its total net assets to C$114.4 billion in 2021, up from $104.0 billion a year earlier, so the ILS allocation remains a relatively small slice of its overall investment firepower.

HOOPP’s investments delivered an 11.28% return in 2021 and the pension indexes well, with a 10-year annualised rate of return of 11.06%.

“HOOPP’s in-house investment team successfully navigated another year of challenges in the economy related to the ongoing effects of the pandemic,” explained President & CEO Jeff Wendling. “The result is a strong return and funded status that help make the Plan secure for the long-term benefit of the healthcare workers of Ontario.”

While the ILS portfolio was likely affected by another year of significant catastrophe events around the globe, it may have contributed valuable diversification through another year of pandemic volatility.

Wendling highlighted the importance of diversification, saying, “HOOPP will continue to purposefully and thoughtfully diversify our portfolio through allocations to a wide array of strategies, including building on our successes in private markets. Our strong performance record puts us in a good position to seek opportunities that will safeguard our members’ pensions, now and into the future.”

The pension also said that it added more expertise in insurance-linked securities in 2021, which will be key to the effective management of this growing insurance and reinsurance linked portfolio at HOOPP.

The Healthcare of Ontario Pension Plan (HOOPP) is just one of the numerous pension fund and major ILS investors we track in our directories here.