Securis Investment Partners

A Message from Lord Pickles and Lord Blunkett, followed by Securis Investment Partners's best practice article

The ability to listen and learn from one another has always been vital in parliament, in business and in most aspects of daily life. But at this particular moment in time, as national and global events continue to reiterate, it is uncommonly crucial that we forge new channels of communication and reinforce existing ones. The following article from Securis Investment Partners is an attempt to do just that. We would welcome your thoughts on this or any other Parliamentary Review article.

Blunkett signature Rt Hon The Lord David Blunkett, MP
Pickles signature Rt Hon The Lord Eric Pickles, MP

www.securisinvestments.com

THE PARLIAMENTARY REVIEW
Highlighting best practice
16 | SECURIS INVESTMENT PARTNERS
Co-founder and Chief
Investment Officer Rob Procter
When the financial markets crash, it is often difficult to remain
immune from its effects due to the vast interconnectivity
of the modern economy. Securis Investment Partners, an
innovative investment management business, however, offers investors
a potential way to avoid the broad connectivity and correlation of
markets and asset classes. Founded in 2005 and based in the heart of
London’s insurance district, the company has an international team
operating out of Bermuda, Switzerland, Japan and the United States.
One of the ways in which they have innovated risk management is
by investing funds in insurance-linked securities (ILS), with a particular
focus both on risks that carry exposure to natural catastrophes and
on life insurance. How this can benefit investors is a topic on which
Co-Founder and Chief Investment Officer Rob Procter says more.
A compelling offering for investors
We provide investment management services and products primarily to institutions
and pension funds who are always looking for new avenues of investment. Many
organisations are in the asset management business, but what differentiates Securis is
the fact that we do not invest in more familiar asset classes such as equities, properties
or fixed-income assets. Rather, we provide investors with exposure to insurance and
reinsurance risks, often related to natural catastrophes – as well as those related to
other classes of insurance such as life insurance. Investors are typically paid an insurance
premium for bearing this risk, which generates the return for our investors.
From the investor’s point of view, the advantage in committing to this type of investment
is that the underlying risk is not correlated to stock markets and other traditional forms of
financial investment. Instead, it hinges on the probability of an event that can be modelled
with a good degree of objectivity. This relatively new and innovative marketplace is
especially appreciated by investors who are spreading risk and diversifying their portfolios.
Our investor base is genuinely global in nature; indeed, roughly two-thirds of our
investors are based outside the United Kingdom, most of whom are large, non-retail
investors. Our trading partners, insurers and reinsurers (those to whom we are providing
protection and from whom we get a return) are similarly international.
Starting from a blank slate
When we first started this business in 2005, the concept of insurance-linked securities or
an investment management business using investors’ capital to support the reinsurance
industry was relatively new. There was little precedent for the concept of fund managers
managing insurance-related risk as opposed to the reinsurance companies doing so. Nor
was there a well-established ILS marketplace with pre-existing practices that we could
simply join in on. We had to figure out our own way, and catalyse a change in the way
the entire global reinsurance marketplace is organised and structured. Put simply, the
emergence of ILS disrupted a somewhat inefficient industry.
We decided to enter this marketplace because we were confident we could be more
efficient, with lower fixed expenses and a more nimble, return-orientated approach
AT A GLANCE
SECURIS INVESTMENT PARTNERS
»Co-founder and Chief
Investment Officer: Rob Procter
»Founded in 2005
»Based in London
»Services: Investment
management
»No. of employees: 60
Securis Investment
Partners
17SECURIS INVESTMENT PARTNERS |
BEST PRACTICE REPRESENTATIVE 2019
to doing business. We were sure that
investors would eventually see the merits
of what we were doing, but it was a
slow process that unfolded and gathered
momentum over a number of years.
These days – largely as a result of these
early efforts on our part and that of
some of our like-minded competitors –
ILS is a much more accepted marketplace
and asset class among institutional
investors and their advisors.
The financial crash helped us
Strange as it may sound, the financial
crash spanning 2008 to 2010 benefited
us. Indeed, that we managed to survive
this painful episode largely unscathed
testifies to our model. We refer to this
period as the “proof of concept”, when
we demonstrated that we are indeed
uncorrelated to more traditional and
well-known financial markets. While
many industries fell to their knees during
this time, we held strong. It was after
this episode that we saw an acceleration
of investors coming on board, paving the
way for the Securis of today.
Regulatory matters
On the whole, we feel that regulations
have been helpful; indeed, they are
in some respects the reason that UK
“alternative asset” fund managers are
structured as they are. With particular
regard to the ILS business, other
jurisdictions such as Bermuda and
Guernsey offer taxation and regulatory
regimes which are especially conducive
to the carrying out of ILS investing
activities – which is why a large amount
of our business is supported via
structures residing in these places.
Being based in London while having
offshore entities in other countries is
a standard practice for companies like
ours, and we believe it has a beneficial
effect for our investors. Notwithstanding
this, we are especially excited about
the UK government’s recently enacted
ILS legislation which seeks to provide
a competitive onshore regime for ILS
businesses like ours in terms of structure,
regulations and taxation. This has to be a
major positive in our view – in relation to
our business, the ILS market in general,
and the UK’s prospects as a whole – given
the huge wealth of talented individuals
with reinsurance expertise working
here. These developments will be vital in
ensuring the UK keeps and strengthens its
position in this important global industry.
Changes in the global market
We feel very positive about the future.
As of now, the ILS involvement in the
insurance and reinsurance market is
only at a nascent stage. In much of
the developing world, many have not
yet insured themselves against natural
catastrophes. In fact, only roughly 30 per
cent of the damages caused by natural
disasters worldwide are paid for through
insurance. This is changing, however:
across the world, the developing nations
are becoming wealthier, and with this
trend will come a greater ability to insure.
As insurance of this kind increases, so too
will the market and, with it, our growth
prospects. This is yet another case of our
interests aligning closely with those of
the general public. As insurance covers
an ever-greater amount of potential
damages, fewer people and countries will
be left in a dire financial position.
What’s also encouraging is the fact that
we started this business with very little
presence in the reinsurance market, but
that we now have, along with our peers,
around a 20 per cent share. This is a
trend, moreover, that shows no signs of
deceleration. This testifies to the need
for businesses to be willing to take on a
certain degree of risk when starting up.
We knew that there was potential in this
area, and we knew we had the expertise
to take advantage of it. It was just a
matter of getting on and doing it.
ILS contributes a growing
proportion of claims costs after
major natural catastrophes
Across the
world, the
developing
nations are
becoming
wealthier, and
with this trend
will come a
greater ability to
insure

www.securisinvestments.com

This article was sponsored by Securis Investment Partners. The Parliamentary Review is wholly funded by the representatives who write for it. The publication in which this article originally appeared contained the following foreword from The Rt Hon Theresa May MP.

The Rt Hon Theresa May MP's Foreword For The Parliamentary Review

By The Rt Hon Theresa May MP

This foreword from the then Prime Minister appeared in the 2018/19 Parliamentary Review.

British politics provides ample material for analysis in the pages of The Parliamentary Review. For Her Majesty’s Government, our task in the year ahead is clear: to achieve the best Brexit deal for Britain and to carry on our work to build a more prosperous and united country – one that truly works for everyone. 

The right Brexit deal will not be sufficient on its own to secure a more prosperous future for Britain. We also need to ensure that our economy is ready for what tomorrow will bring. Our Modern Industrial Strategy is our plan to do that. It means Government stepping up to secure the foundations of our productivity: providing an education system that delivers the skills our economy needs, improving school standards and transforming technical education; delivering infrastructure for growth; ensuring people have the homes they need in the places they want to live. It is all about taking action for the long-term that will pay dividends in the future.

But it also goes beyond that. Government, the private sector and academia working together as strategic partners achieve far more than we could separately. That is why we have set an ambitious goal of lifting UK public and private research and development investment to 2.4 per cent of GDP by 2027. It is why we are developing four Grand Challenges, the big drivers of social and economic change in the world today: harnessing artificial intelligence and the data revolution; leading in changes to the future of mobility; meeting the challenges of our ageing society; and driving ahead the revolution in clean growth. By focusing our efforts on making the most of these areas of enormous potential, we can develop new exports, grow new industries and create more good jobs in every part of our country.

Years of hard work and sacrifice from the British people have got our deficit down by over three quarters. We are building on this success by taking a balanced approach to public spending. We are continuing to deal with our debts, so that our economy can remain strong and we can protect people’s jobs, and at the same time we are investing in vital public services, like our NHS. We have set out plans to increase NHS funding annually by an average by 3.4 percent in real terms: that is £394 million a week more. In return, the NHS will produce a ten-year plan, led by doctors and nurses, to eliminate waste and improve patient care.

I believe that Britain can look to the future with confidence. We are leaving the EU and setting a new course for prosperity as a global trading nation. We have a Modern Industrial Strategy that is strengthening the foundations of our economy and helping us to seize the opportunities of the future. We are investing in the public services we all rely on and helping them to grow and improve. Building on our country’s great strengths – our world-class universities and researchers, our excellent services sector, our cutting edge manufacturers, our vibrant creative industries, our dedicated public servants – we can look towards a new decade that is ripe with possibility. The government I lead is doing all it can to make that brighter future a reality for everyone in our country. 

British politics provides ample material for analysis in the pages of The Parliamentary Review 
The Rt Hon Theresa May MP
Prime Minister