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City National touts ILW fund

City National Bank subsidiary City National Rochdale has started marketing a new fund that will seek investments related to industry loss warranties (ILWs).

The asset manager has partnered with Bermudian reinsurer Iris Re to launch the City National Rochdale Select Strategies Fund, which has a target of raising $500mn during the first two years.

It is planning to invest in both ILW and cat bonds, with 70-80 percent of the fund being allocated to ILWs and 10-20 percent to cat bonds.

The fund forms part of the asset manager's strategy to increase diversification, said Garrett D'Alessandro, CEO of City National Rochdale.

"The goal will be to provide our clients with a new investment alternative that strives to produce returns that are above those of traditional investment grade fixed income and commensurate with equities, while not correlating with either during times of volatility," he said.

The City National bank currently manages $45.1bn in assets, and manages a further $55.5bn in client investment. It is part of the Royal Bank of Canada.

Iris Re is a Bermudian reinsurance vehicle owned by Cartesian Re, a private equity-backed insurance-linked securities (ILS) manager that was established in 1999.

Cartesian Re expanded its assets under management to $550mn in January 2017, up from an estimated $250mn in 2016.

The ILS sector is continuing to attract new investors with recent cat bond fund launches.

London-based asset manager Tenax Capital has hired former Swiss Re ILS structurer Marco della Giacoma to establish an ILS strategy, while in New York hedge fund-of-funds manager K2 Advisors is expanding its involvement in the sector by investing directly in cat bonds for the first time.

Neon is also working on establishing an ILS fund that would see the revamped Lloyd's business bring in third party capital to support its nascent property catastrophe reinsurance book.


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