Global asset management company GAM has appointed Swiss Re as co-investment manager for its insurance-linked securities fund range. 

Swiss Re already manages about $US5 billion ($8.3 billion) in ILS assets. GAM funds totalled about $US3 billion ($5 billion) as of March 31. 

GAM Investments Group CEO Elmar Zumbuehl says the company, listed in Switzerland, has been providing access to the portfolio-diversifying securities, including catastrophe bonds, for 20 years. 

“GAM and Swiss Re’s combined strengths across global distribution, product innovation, risk management and investment expertise will help make an already exciting asset class more accessible to our clients,” he said. 

Catastrophe bonds, issued to provide financial protection against losses from natural disasters or other perils, have low correlation with other financial market asset classes.

Swiss Re Insurance-Linked Investment Advisors Corporation CEO MariaGiovanna Guatteri says the ILS market set records last year.

“Strong returns on cat bonds have highlighted the attractiveness and diversification value of the asset class for investors,” she said. “We see considerable interest both from cat bond issuers and investors.”

As co-investment manager, Swiss Re will be responsible for investment and portfolio management decisions, while GAM will retain responsibility for risk management oversight and will lead global distribution and product structuring. They will collaborate on ILS innovation.

Swiss Re says it has been a pioneer in catastrophe bonds since the market started in the 1990s, and has arranged transactions with a notional value of about $US50 billion ($83 billion), accounting for more than a quarter of total cat bond issuance value since 1997.