Ambassador cat bond fund hits $100m AUM, allocates more, adds second ILW

The Ambassador catastrophe bond mutual fund strategy has now surpassed the $100 million in assets under management (AUM) level needed to be recognised as a qualified institutional buyer (QIB), with further capital raised and allocated to new catastrophe bond positions in the last quarter of record.

The Ambassador Fund was launched by Embassy, an investment manager with a focus on non-correlated strategies and delivering income potential, back in the third-quarter of 2021, becoming the latest in a string of US mutual investment funds with a focus on catastrophe bonds and insurance-linked securities (ILS).

As we reported earlier this month, the sub-advisor to the Ambassador cat bond fund was quota share reinsurance focused insurance-linked securities (ILS) investment fund manager Tangency Capital, but that company has stepped down from the position.

Instead, cat bond specialist and former Nephila exec Niall MacGillivray parted ways with Tangency Capital to become the dedicated portfolio manager to the Ambassador catastrophe bond mutual fund strategy.

The Ambassador Fund had allocated its first capital to catastrophe bonds in the quarter to April 30th of 2023, while also renewing a private ILW arrangement.

At that time, the Ambassador Fund’s total net assets had reached just over $82.1 million at April 30th 2023.

Now, another quarter on, total net assets of the cat bond focused mutual fund stand at $100.6 million, surpassing the all important level needed to be considered a QIB.

A QIB, or qualified institutional buyer, is a type of institutional investor that can be directly sold securities via a private placement under Rule 144A.

It more directly opens up the pipeline of cat bond issuance to the Ambassador fund, which will allow it to participate in the upcoming busy issuance season through Q4 and into Q1 of 2024.

In the Ambassador Fund portfolio, investments into catastrophe bonds have now reached over $87.3 million at the end of July valuation, up from $72.4 million at the end of April.

Interestingly, the investment fund has also added a new industry-loss warranty (ILW) investment at the June renewals, with a second preferred note under the Consulate Re vehicle added.

The Ambassador Fund had renewed a Consulate Re 2023-1A ILW transaction at the January renewals and that position has gained in value to more than $3 million now.

At June 2023, the Ambassador Fund added a slightly larger Consultate Re 2023-2A preferred note investment, currently valued at almost $4.6 million.

Which took the ILW component of the investment fund to $7.66 million at July 31st 2023.

At the end of April, the Ambassador Fund had been holding treasuries, but that capital has now been invested and the majority of the fund is now in cat bonds and the ILW’s, with just around $5 million in short term money market fund investments.