Month: April 2024

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Banque Bonhôte & Cie, a Swiss private bank, investment firm and wealth manager, has announced the launch of a new environmental, social and governance (ESG) focused fund strategy that will incorporate catastrophe bonds as one of its allocations.

banque-bonhote-cie-logoPierre-François Donzé, Head of Asset Management at Banque Bonhôte, said that, “Our approach and the integration of ESG criteria, is based on a quantitative allocation methodology to identify appropriate investment opportunities in the entire spectrum of the fixed income bond universe.”

The newly launched Bonhôte Selection Global Bonds ESG fund strategy does not follow a benchmark, instead leveraging quantitative methods to identify assets to invest in from the fixed income universe, based on indicators that define the attractiveness of one type of bond, over another.

These can range from the majority of the global fixed income universe, including sovereign bonds, investment-grade and high-yield corporate bonds.

But in addition catastrophe bonds are a specific asset class that will be targeted for this ESG focused investment fund strategy, the private bank explained.

The private bank notes that, catastrophe bonds, “Offer an advantageous risk/reward and provide useful diversification through a performance that is largely uncorrelated with conventional financial markets.”

Explaining that, “CAT bonds, which are part of the insurance-linked securities (ILS) category, are used by insurers and reinsurers to transfer the risks of predefined events to investors.”

The strategy has been optimised for investors whose reference currency is the Swiss franc and takes into account the cost of currency hedging as well.

The use of ESG criteria to identify opportunities is “a fundamental part of our investment strategy,” Banque Bonhôte & Cie said.

“The fund promotes environmental or social features, or a mix of the two, by investing in the vehicles and securities of issuers with an ESG profile above the median of their peers. Many controversial business activities and sectors are automatically excluded,” the company further explained.

Catastrophe bonds can be up to a maximum of 20% of the ESG investment fund strategy

Julien Stähli, Director of Investments, stated “This new fund gives pride of place to ESG criteria and marks a further step in our long-standing commitment to responsible investment and quantitative approaches.”

Donzé also said the approach taken, “Makes it possible to add value compared to strategies limited to a single market segment. The indicators used estimate the relative attractiveness of the various segments of the bond market on a historical basis.”

He also said that the Global Bonds ESG fund portfolio will be “dynamically rebalanced” when the indicators used suggest this is necessary.

It’s clear that Banque Bonhôte & Cie recognises the investment qualities of catastrophe bonds and the diversifying benefits they can deliver to portfolios, as well as the inherent ESG qualities given their role in the provision of critical disaster risk financing to support the global insurance and reinsurance industry.

As we previously reported, Banque Bonhôte & Cie had said before that catastrophe bonds, as an asset class, exhibits the rare property of price moves that are independent of broader financial markets and so can be considered “the only true source of diversification.”

Banque Bonhôte launches ESG fund strategy incorporating catastrophe bonds was published by:
Our catastrophe bond deal directory
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With the insurance-linked securities (ILS) and reinsurance marketplaces being document-heavy, UK-based legal and regulatory technology company Scribestar has an ambition to streamline document production and compliance for these sectors and is rolling out its platform globally.

scribestar-logoScribestar offers a secure collaboration platform that can automate and streamline the administration of paper-heavy processes related to the structuring of complex financial transactions and documents use-cases in private and public markets.

Already, Scribestar has worked with an unnamed Bermuda based reinsurance company that sponsored a 144A catastrophe bond, to help it prepare and manage the extensive documentation used within such an ILS transaction.

Scribestar is already a tech-service provider to the London Stock Exchange Issuer Services Marketplace, with its technology having been used by law firms, issuers, and complete deal teams to produce capital markets documents, compliance forms and checklists for a range of public issuances and private transactions.

The goal is to provide an efficient and cost-effective document production and publication process for high quality outputs, Scribestar explained.

Working with the Bermuda-based reinsurer, Scribestar’s platform enabled the company to collaborate among the lawyers, sponsors, and issuers, providing a single source of truth for inputting information to the 144A catastrophe bond documents, while streamlining legal and administration processes, and helping it to be ready to access the market at the optimal time.

Having been trialled in the ILS and reinsurance markets, Scribestar says it has “identified documentation production and compliance challenges that its technology is well-positioned to alleviate.”

The ILS and reinsurance market is well-known for its inefficiencies when it comes to documentation and Scribestar aims to improve that, regardless of the transaction type (private, Rule 144A, specialty, etc.).

Srinivas Suravarapu, CEO of Scribestar explained, “We are excited to offer our unique platform for use in the ILS and Reinsurance market and look forward to introducing it to issuers, lawyers, sponsors and other market participants. Having spoken extensively to reinsurance brokers, sponsors and the Bermuda Stock Exchange about challenges in this space, we followed it up with extensive testing, trials and integration of market rules, forms and checklists.

“We are confident that some of the best practices we have learned from capital markets can now be passed on to users in this sector by offering a secure and seamless service that brings meaningful efficiencies to their operations. We invite them to reach out to us to learn more and see the platform in action.”

Scribestar aims to streamline documentation for ILS & reinsurance was published by:
Our catastrophe bond deal directory
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