GAM and Swiss Re’s new partnership on the management of the Swiss asset manager’s Star Cat Bond Fund series will explore ILS opportunities beyond the cat bond market over time.
After the announcement of the deal today, GAM global head of client solutions Rossen Djounov told this publication that the firm had long-term investors who were looking for an answer on “what comes next after cat bonds”.
The ILS market has matured since the early days of the GAM/Fermat partnership when he compared their role to “missionaries” educating investors on the new product.
“We've achieved so much with Fermat but it was time to move on,” he said, adding that partnering with a “global titan” in reinsurance would allow it to bring in new strategies.
“We bring the Swiss Re platform to this opportunity,” added Patti Guatteri, CEO of Swiss Re’s US-registered investment manager SRILIAC.
From May, it will co-manage GAM's ILS funds, which have ~$3bn in assets under management.
Djounov said outflows experienced by the GAM cat bond funds over the past year partly reflected fee competition as some investors moved to cheaper providers.
The firm will be lowering fees on its institutional class of shares by 30 basis points (bps) when the new agreement incepts on 7 May, taking the base fee down from 95bps to 65bps.
“It's not all about fees – expertise counts,” Djounov said.
The GAM Star Cat Bond Fund has acted as a bellwether for cat-bond strategies for more than a decade, since it incepted in 2011.
According to the Absolute Hedge 2024 review of the alternative UCITS space, the GAM Star Cat Bond Fund returned 14.5% in 2024, ranking it as the third-best-performing fund in the AH Credit Index last year.
Djounov said Swiss Re’s ILS track record was competitively stronger than the near-term GAM ILS returns, outperforming them over the past three years.
“We think we’re in a very strong position to grow,” he added.