Future Fund ILS allocation declines to US $1.49bn at June 30th 2024

Australian sovereign wealth investment fund, the Future Fund, saw its allocation to insurance-linked securities (ILS) fall again at the mid-point of this year, with the investments it has with specialist ILS fund managers declining to the equivalent of US $1.49 billion.

The Future Fund has been invested into insurance-linked securities (ILS) for some time, having allocated capital into reinsurance linked assets through investments made to strategies managed by Elementum Advisors in 2015 and HiscoxILS in early 2016.

With these investments having come not long in advance of the challenging catastrophe loss period experienced from 2017, the Future Fund’s ILS allocation grew for a time as it had explained was its goal back then, but then began to decline around 2022.

As of June 30th 2022, the Future Fund counted ILS investments of roughly US $2.6 billion.

Then, the Future Fund of Australia’s ILS investments fell in dollar terms to US $1.86 billion by June 30th of 2023, at which point they made up roughly 1.4% of the sovereign investors total asset base.

Now, the latest disclosure made by the Future Fund of its external manager allocations shows the total sitting at just under AU $2.24 billion, which at that time was worth roughly US $1.49 billion.

We understand the Future Fund has been redeeming some of its ILS investments over time, which is presumably the driver of the decline in assets allocated to ILS managers over the last year.

It comes at a time when other major Australian institutional investors have been increasing, or making new, allocations to the catastrophe bond and insurance-linked securities (ILS) asset class.

The latest disclosure from the Future Fund shows that, across the number of funds managed by the sovereign wealth investment entity, total assets were approximately AU $267 billion across the funds that include some ILS investments.

Which means that, at AU $2.24 billion (US $1.49bn) the ILS component has shrunk to just under 0.84% of its assets managed in these funds, including the giant Future Fund itself.

In terms of allocations to dedicated ILS managers, the allocation to Hiscox ILS amounted to AU $1.42 billion (US $950m) at June 30th, while the allocation to Elementum Advisors stood at almost AU $817 million (US $544m).

It’s important to note that we can only see the allocations disclosed by the manager as of June 30th this year, so it’s unknown whether any additional changes have occurred since.

Also, the Future Fund of Australia continues to list Blackstone Multi-Asset Investing under the external managers it allocates to ILS through. We don’t have clarity on this specific positions size, and whether this is P&C focused or perhaps a life related investment, or a multi-strategy fund that includes reinsurance, but it is additional to the Hiscox ILS and Elementum positions held.

View details of major pension fund and sovereign wealth investors in ILS and reinsurance in our directory.