Hawksmoor targets reinsurance with global fund

Hawksmoor Investment Management has introduced the Polar Capital global insurance fund to its Vanbrugh fund of funds.

The firm sees the global insurance sector as attractive due to a combination of growth potential supported by low valuations.

The Polar Capital fund, which was previously the Hiscox insurance portfolio fund co-managed by Alec Foster and Nick Martin, invests mainly in the commercial and reinsurance sectors. Hawksmoor is enthusiastic about getting exposure to the reinsurance area after a year of natural disasters such as floods and earthquakes.

Reinsurance is insurance bought by insurance companies to minimise losses on policies they provide by transferring some of the risk to another insurance company or reinsurer.

Hawksmoor says a year of natural disasters has not led to insurance companies having to make big payouts on claims but it has enabled insurance companies to put up their premium rates, which will benefit investors. It says there will be higher margins for firms in the reinsurance sector but equity valuations are cheap relative to their historical average.

Hawksmoor points out that risk assets such as corporate bonds and equities tend to be over-valued when investors feel over-confident and cheapest in times of uncertainty, so it has weighted Vanbrugh heavily towards the corporate bonds and equities of quality firms.