Kiatnakin Phatra Asset Management (KKP Asset Management), a capital markets investment firm based in Thailand and part of the Kiatnakin Phatra Financial Group, has launched two catastrophe bond strategies for the Thai domestic market, with both set to serve as feeders to the Twelve Cat Bond Fund, a Twelve Securis strategy.
As such, this is effectively a partnership between KKP Asset Management and insurance-linked securities (ILS) manager Twelve Securis that provides benefits both ways.
KKP Asset Management gains a unique alternative investment fund strategy to offer to the Thailand investor market, a differentiating offering for its clients and one not widely available there.
While Twelve Securis gains a local market distribution relationship for Thailand, a country relatively untapped by the established ILS fund management community, but where there is a concentration of smaller institutional investors, family office and qualified high-net worth type investors, as well as corporate investors that might also look favourably on diversifying opportunities.
It appears both strategies are structured as feeder funds in their own right, the KKP Cat Bond Fund which is an open-end strategy that can be traded in Thai baht currency, and the KKP Cat Bond USD, which can be traded in US dollars.
KKP Asset Management believes that these offer a new dimension of investment for its clients, through strategies focused on catastrophe bond investments, something currently unavailable in the Thai domestic market.
Thai investors have of course been able to allocate to international cat bond funds. But for smaller institutions, high-net worth, family offices and many other allocators, a domestic fund offering will be far more easily accessible and the Thai baht feeder simpler for them to invest in.
Both of the KPP Cat Bond funds will focus on making their investments into the Twelve Cat Bond Fund, which is Twelve Securis’ flagship cat bond strategy, a UCITS fund structure with over $4.3 billion in assets (the largest in the UCITS cat bond universe).
Yuthapol Laplamoon, Managing Director of KKP Asset Management, highlighted that these new cat bond funds will offer investors a way to gain access to a diversifying source of return, that is broadly uncorrelated with the wider stock and bond markets.
The two KPP Asset Management cat bond funds will be available to institutional investors and certain ultra high-net worth investors that qualify.
This news is further evidence of the expanding insurance-linked securities (ILS) investor base and we anticipate seeing similar partnership-style arrangements in other countries around the world. Especially where investors might have an appetite to allocate to instruments such as catastrophe bonds or private reinsurance opportunities and a domestic offering could be a way to gain traction more easily in relatively untapped markets.
