The importance of handling end-investor relationships with delicacy during periods of transition is an active theme in the industry in 2025, as several top-tier ILS managers undergo significant changes.
The largest ILS manager, Fermat Capital Management, has decoupled from former distribution and white label partner, the Swiss asset manager GAM.
In another part of the market, Twelve Capital and Securis Investment Partners have gone through a coupling process, with Twelve Securis now moving forward as a single entity.
While these are two distinct situations – one an M&A story and the other a distribution arrangement ending – they are both significant recalibrations at top-tier ILS managers. These shifts come with potential implications for key investor relationships that will need careful handling.
Any major transition raises a potential hazard for an investment manager, as they can cause end-investors to turn a sharper than usual eye on the relationship and question what the future may hold.
There could be movement of key people or potential shifts in strategy, and these kinds of changes need delicate negotiation and communication with end-investors.
For Fermat, the divorce from GAM will mean the loss of a ready distribution network, including reach into the GAM friends and family network, according to a source.
The relationship between the two firms goes back to the early 2000s, and in 2011, they launched the FCM Cat Bond Fund, a British Virgin Islands-domiciled strategy investing in cat bonds and other ILS, seeded with $140mn of GAM client assets. That fund will now be solely managed by Fermat.
Notwithstanding the long connection, the early signs are that Fermat’s fundraising momentum has not been impacted so far, given the rapid build-up of the Fermat-branded UCITS and commingled ILS funds.
GAM aims for ILS expansion
In May, co-management of the flagship fund GAM Star Cat Bond Fund and other GAM ILS funds transferred to GAM and Swiss Re Insurance-Linked Investment Advisors Corporation, the SEC-registered investment advisory firm launched by Swiss Re in 2022.
In April, Rossen Djounov, GAM global head of client solutions, told this publication that the firm would be lowering the fees on its institutional class of shares by 30 basis points (bps) to 65bps.
GAM Star Cat Bond UCITS fund’s AuM stood at $1.8bn as of 27 May, having lost around $770mn since the end of March.
GAM has indicated its ambition to keep growing its ILS offerings, hiring former Twelve Capital executive director Rom Aviv, working out of Zurich, to drive expansion of the ILS business and lead the collaboration with Swiss Re.
The appointment suggested GAM was taking the opportunity to shift back some control closer to home in Switzerland, a source noted.
Fermat keeps up fundraising momentum
Meanwhile, ILS manager Fermat launched its Fermat-branded commingled ILS offerings in February last year, including the Fermat UCITS Cat Bond Fund.
Fermat’s UCITS and commingled ILS funds have raised around $4.5bn in AuM so far, according to a source. This includes $1.6bn in the UCITS strategy as of the end of May, as previously reported.
Fermat has historically worked with other distribution partners too, including Australian investment adviser Brookvine, starting in 2010.
Brookvine, which was acquired in 2023 by Associate Global Partners, raised $680mn for Fermat’s ILS strategies, according to its website.
In January, Fermat boosted its in-house investor relations team, with new hires Greg Hickling in Australia, focused on the Asia-Pacific region, and Christopher Hoenig, focused on Europe. Hoenig is a former GAM head of distribution in Germany.
The firm has also indicated its ambition to expand in non-cat ILS. It acquired casualty ILS fund Nanorock from Ledger last year and has staked its interest in cyber, as a pioneering investor in the early cyber bond transactions.
M&A expands the investor base
Meanwhile at Twelve Securis, the narrative of the merger has centred on the complementary nature of the two firms, rather than having a specific focus on access to distribution networks.
Twelve Capital was a significant player in bonds, while Securis was well established in the private ILS space. The two firms had just one end-investor in common.
Urs Ramseier, CEO at Twelve Capital, told this publication: “Periods of transition – especially mergers – are defining moments in investor relationships. End-investors rightly focus on consistency in investment philosophy, process and the individuals managing their capital. We’ve been deliberate in preserving those pillars.”
He added that such transitions also “offer a rare opportunity to enhance what we do”, noting that there are benefits to becoming a larger platform. “We can now access deeper resources, broader distribution and stronger operational infrastructure, all of which ultimately benefit the end-client.”
The history of takeovers and mergers in ILS also shows the potential benefits for an independent firm of joining into a larger asset manager.
Secquaero’s AuM stood at $2.9bn when majority control was purchased by Schroders in 2016. Schroders ILS assets have more than doubled in that period to reach $6.5bn as of the end of May.
The ILS manager was able to plug into Schroders’ distribution network of sales professionals and tap into pools of capital across private wealth and institutional markets.