Insurance Linked Securities: We are the first firm to offer an ILS solution in an automated client centered platform through our strategic relationship with Pioneer Investments. Finally, the “Mass Affluent” (Main Street) who do not have access to the same bankers that Warren Buffett has or major insurance companies, state municipalities or governments do, are now able to invest in these non-correlated total return type of funds with a minimum account size of $25,000k, instead of the normal account size of institutional investors with assets of $1 million or greater.
Insurance-Linked Securities (ILS) provide a unique opportunity to invest in an alternative
asset class that is uncorrelated with financial markets. ¹This may result in strong diversification benefits and an attractive risk-return profile. ²Further, we believe a portfolio construction approach that mimics the regional and peril exposure of the global reinsurance industry and that seeks to reduce adverse selection through a comprehensive due-diligence process can add value over a purely passive approach over time.
The Pioneer ILS Interval Fund pursues total returns that exceed those of a purely passive
approach with lower volatility. The Fund seeks to be highly diversified across reinsurance peril, geographic region and security type.
Active Management Approach: Careful assessment of risk and return potential
Pioneer utilizes a research intensive approach to ILS investing that seeks to minimize adverse selection and non-modeled risks. Pioneer’s global fixed income and equity research analysts support the portfolio management team, which includes comprehensive coverage of the insurance industry. We believe this provides unique insights into re/insurance industry’s approach to capital markets and should allow for strong long-term risk-adjusted returns.
¹Correlation – The degree to which assets or asset class prices have moved in relation to one another. Correlation ranges from -1 (always moving in opposite directions) through 0 (never move together) to 1 (always move together).
²Diversification does not assure a profit or protect against loss.
Distinguishing Features (continued)
Risk Management Focus: A research-driven ILS allocation
Our process utilizes a deep team of quantitative risk analysts and sophisticated modeling capabilities. Analysts work closely with the portfolio management team to provide comprehensive portfolio risk and attribution analysis. The risk modeling process is supported by AIR Worldwide CATRADER system. This is a risk analytics system widely used by the insurance industry.
Experience & Commitment: Uniquely positioned expertise
Pioneer has been investing in the asset class since 2007. During this period the market structure and investor base has evolved significantly. Our experience in investing across insurance cycles may enhance our ability to evaluate and negotiate deal structures and gives us tenure in a specialized market that can help promote strong relationships.
Optimal Size with Global Access
Pioneer’s ILS team oversees more than $1.18 billion and is part of a broader $251.9 billion investment organization (as of September 30, 2016). We manage ILS as a component of many of our diversified portfolios and on a dedicated basis. We believe our size and flexibility allows us to be an attractive risk-sharing partner with re/insurance sponsors. This may enhance our relationships.
The foundation of our investment approach is robust quantitative analysis. We utilize a top rated insurance industry analytic system, AIR Worldwide CATRADER. The risk model contains a robust database of historical catastrophic events and detailed current property structures that allows Pioneer to model its peril exposures at both the security and portfolio level. The objective of our portfolio construction approach is to build a portfolio that mimics the region and peril diversification of the global re/insurance market.
Importantly, we do not invest in every ILS deal issued into the market. We utilize a comprehensive due diligence process to evaluate each investment for the appropriate structure and alignment of interest between the Fund and the sponsoring cedent.
Fund Overview | Pioneer ILS Interval Fund