Stone Ridge adds $400m in mutual ILS fund assets, reaching $4.4bn

Stone Ridge Asset Management, the New York based alternative risk premia focused investment manager, has continued to add more capital to its mutual insurance-linked securities (ILS) fund strategies in the last quarter of record, reaching over $4.4 billion in net assets across these registered funds by the end of April this year.

That’s an increase of just over $400 million in the quarter since the end of January, as the investment manager’s mutual ILS fund offering continued to grow and Stone Ridge capitalised on rising investor demand for the ILS asset class.

Stone Ridge Asset Management’s mutual ILS fund strategies had seen their assets under management fall to as low as $2.5 billion back in 2022.

But, since then, the managers mutual fund strategies focused on catastrophe bonds, private ILS quota shares, sidecars and collateralized reinsurance have recovered strongly.

In particular, Stone Ridge has grown its cat bond fund and also the ILS component of its Diversified Alternatives strategy, while its more private ILS and collateralized reinsurance quota share strategy has been relatively stable, in AUM terms.

The manager’s most catastrophe bond focused mutual ILS fund strategy, the Stone Ridge High Yield Reinsurance Risk Premium Fund, has now seen its AUM increase by an impressive 72% in just the last year.

As of April 20th 2024, this strategy had grown its assets to more than $2.87 billion and even more impressively, this strategy has grown every quarter now across a four year period.

That has been the main driver of Stone Ridge being able to grow the overall assets of its three main mutual ILS funds to over $4.4 billion by April 30th this year, up from the $4.02 billion at January 31st when we last reported on the manager.

Meanwhile, the Stone Ridge Reinsurance Risk Premium Interval Fund, that invests across the spectrum of ILS and reinsurance-linked assets with a particular focus on sidecars and private quota shares, as well as other collateralized reinsurance arrangements and to a lesser degree catastrophe bonds, remained stable in the last quarter, with assets of $1.08 billion by April 30th this year.

While this private ILS focused mutual fund has remained stable, it is clear that it remains a key provider of quota share capital to insurers and reinsurers, with a number of new transactions entered into for this year listed in its latest portfolio disclosure.

The Stone Ridge Diversified Alternatives Fund, which is a multi-strategy fund that began adding ILS investments to its portfolio in 2023, has continued to expand its ILS component as well.

This multi-asset strategy counts roughly $460 million of ILS assets, around 38% of the entire fund, with catastrophe bonds still the main component of that and the driver of growth at $358 million as of April 30th 2024.

We understand that Stone Ridge has continued to grow its catastrophe bond assets under management since the April 30th date of its latest report, with the cat bond focused Stone Ridge High Yield Reinsurance Risk Premium Fund currently sitting with net assets of approximately $3 billion, a new high.

It will be interesting to see how the private ILS focused strategy AUM changes after the mid-year renewals, when the next portfolio disclosures come due, to see whether Stone Ridge has increased that fund size to capitalise on reinsurance market conditions.