Munich Re is working towards the launch of an insurance-linked securities (ILS) fund to manage third-party capital due to increasing interest from a wide range of investors.

Andreas Muller, the Head of Origination, Distribution and ILS Investments in Munich Re’s Risk Trading Unit, says the company has been approached by several potential investors asking whether Munich Re would act as an adviser to help assess the underlying insurance risk of other ILS funds.

“This showed to us that potential investors would rely on Munich Re’s expertise when it comes to investing in ILS,” Dr Muller said.

The reinsurer is already heavily involved in alternate reinsurance as a sponsor of and investor in catastrophe bonds and consultant on the structuring and placement of ILS.

Dr Muller says Munich Re has been operating a proprietary ILS fund for more than five years, and is assessing the opportunity to expand its expertise to an investment management fund for institutional investors such as insurers and pension funds, which he says is “just the next logical step forward”.

Munich Re has not yet set a launch date for the fund, nor has it decided if it will operate the ILS fund alone or through a joint venture with an established investment manager.