Premier fixed income investment manager PIMCO, which is owned by global re/insurer Allianz, has launched a new property and casualty insurance-linked securities (ILS) business, working in partnership with its parent.
The new ILS business launch is to be led by Rick Pagnani as Executive Vice President (EVP), who brings more than 30 years of ILS market experience to the role, and was previously the Chief Executive Officer (CEO) of Mt. Logan Re, the ILS division of Everest Re.
Working in partnership, PIMCO and Allianz will source global catastrophe risk in the form of collateralised reinsurance as well as other structured investments, while at the same time keeping independent underwriting and portfolio construction procedures. According to an announcement, this approach provides PIMCO with flexibility to source risk from the open market.
Emmanuel Roman, PIMCO’s CEO, said: “We are excited to enter the insurance-linked securities market at a time when volatility has become a mainstay of financial markets and clients want to diversify their investments. Partnering with Allianz will give PIMCO access to a diversified portfolio of global catastrophe risk and the ability to leverage the robust capabilities of a premier global insurance group in our effort to deliver attractive risk-adjusted returns for clients.”
Both Allianz Re and Allianz Global Corporate & Specialty (AGCS) will support the new PIMCO ILS operation, via global underwriting networks and the deal structuring capacity and experience of its Capital Solutions team.
Amer Ahmed, Allianz Re CEO, said: “We believe that this partnership of PIMCO and Allianz truly leverages the strengths of both companies. With PIMCO we have a partner with access to an investor base that can provide the capital for which Allianz can supply insurance risks, both traditional catastrophe exposure risks and over time other risk classes. At Allianz we are excited that this will enable us to expand our underwriting capacity and generate new fee-based income streams.”
The ILS market, also known as the alternative reinsurance capital market, has expanded rapidly in recent times, increasingly claiming a larger slice of the overall reinsurance market pie.
PIMCO’s expertise and experience within its alternatives platform, which has assets under management (AuM) of more than $34 billion (the manager has a total AuM of roughly $1.72 trillion), combined with Allianz’ global catastrophe risk portfolio, means the pair could be a real force in the ILS space and further pressure the traditional players.