Man Group to help investors access “attractive” insurance risk pools

Man Group, a global independent alternative and active investment management firm, is building out a range of capital solutions services of relevance to the insurance and reinsurance industry, which includes the ability to help third-party investors access returns derived from insurance risks.

Man Group has a history in the insurance-linked securities (ILS) market, not least as the investment firm once held an 18.75% stake in the world’s largest insurance-linked securities (ILS) investment fund manager Nephila Capital, a stake that it sold in 2018 to Markel, netting an attractive profit from it.

Man Group also incorporates catastrophe bonds and insurance-linked securities (ILS) into certain alternative investment fund strategies that are managed under its Man AHL arm, which focuses on systematic strategies focused on delivering diversification as well as returns to investors.

But, within a newly formed initiative named Capital Asset Solutions (CAS), that will sit within Man Solutions Limited, the company is aiming to offer services and products to both help insurance and reinsurance firms improve their competitiveness, increase their resilience and grow, with a tailored and flexible approach to capital and risk transfer.

The Capital Asset Solutions team aim to provide re/insurers with access to flexible capital, either through direct investment, reinsurance or other forms of balance sheet enhancing transactions, on top of accessing Man Group’s specific asset management capabilities.

The company has hired Stephan Muecke as a managing partner in the Man Capital Asset Solutions team. He previously held senior asset management and insurance strategy positions with reinsurance firm Swiss Re, investor Oaktree Capital and investment banking group Merrill Lynch.

Dan Robinson has also joined Man’s Capital Asset Solutions team from CIFC Asset Management, where he was CIO of their European business. He previously worked at private equity giant Apollo Global Management, where he was Head of Liquid Credit (Europe), and had also spent twelve years at Oaktree Capital.

Part of the move to create this new team focused on capital solutions for the insurance and reinsurance market is a recognition that the industry has evolved, as too have capital markets and that the two are converging in multiple ways.

By providing asset, portfolio and capital solutions, Man Group hopes to make itself more important in the space and become a trusted partner for re/insurers looking to access capital in all its forms, as well as to help its investors on the asset management side benefit from re/insurance market linked returns.

There is an element of insurance-linked securities (ILS) here as well, as we said, given new hire Stephan Muerke, Managing Partner, explained that Man Group’s Capital Asset Solutions team will be, “Providing clients with access to attractive risk pools through investment solutions at the intersection of the insurance industry and capital markets.”

Through risk transfer transactions, Man Group underwrites and reinsures insurance related liabilities and provides investors with access to the underlying risks, so here the investment giant is venturing further into the insurance-linked investments space, with offerings akin to ILS, that benefit re/insurers through capital efficiency and flexibility, while delivering relatively uncorrelated insurance-linked returns to investors.

Man Group’s focus on these capital efficiency offerings for insurance and reinsurance markets, as well as connecting them with investors, represents further evidence of what is effectively ILS, or at least insurance-linked investing, expanding outwards through global asset managers, that are looking to satisfy investor demand for new, structurally complementary and diversifying sources of return.

Large investment firms, such as Man, have the deep capital market structuring expertise and access to investor capital to be able to work with re/insurance and investment clients to match the pair in efficient ways, that deliver the capital flexibility the re/insurers need and the investment returns sought by its other clients.

Commenting on the launch of the Man Capital Asset Solutions (CAS) offering, Luke Ellis, CEO, Man Group, said,
“Substantial structural change in both global asset management and global insurance markets over the past decade has starved insurers of yield and created a more complex regulatory environment. By leveraging Dan and Stephan’s significant expertise, and combining it with our established alternative investment platform, we think we are well positioned to provide innovative asset, portfolio and capital solutions for insurers and in related product areas. The markets we are targeting are vast, so there is scope to create a scalable insurance asset management business and we are looking forward to building out our capabilities in this area.”

Dan Robinson, Managing Partner, CAS added, “We believe there is a huge opportunity to match the needs of investors in complex regulated markets, like insurance, with investment products optimised for their return, liquidity and regulatory needs. The sophistication and breadth of Man Group, especially in credit, technology and bespoke solutions, in conjunction with a commitment to provide capital, represent a very compelling offering across our target markets in our view. This requires an integrated approach and we are very excited to add our specific expertise in delivering these solutions to clients.”