Lloyd’s insurers shun hedge funds
Lloyd’s of London insurers have thumbed their noses at hedge funds and private equity investments, Bloomberg reports.
Catlin Group, Brit Insurance, Chaucer and Beazley have withdrawn or issued redemption requests on as much as £434 million of investments after returns fell by more than half.
“The premise we and the rest of the world looked at in terms of hedge funds was that they would provide an uncorrelated return to things like the equity markets. That didn’t happen,” said Paul Jardine, Catlin’s chief operating officer.
Last year hedge funds posted their worst ever results, dropping 19%, statistics from Hedge Fund Research show.
Aggregated accounts from Lloyd’s underwriters show investment returns of £522 million in 2008, down from £1.2 billion in 2007.
Hedge fund manager Chris Manser, of AXA Investment Managers, said he “understands” why insurers were disappointed with returns last year.
“The value proposition of hedge funds for insurers is supposed to be steady returns and low volatility,” he said.
“Losing 25 percent is absolutely not in line with that.”
Category: Companies News, Financials, Insurance News
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