Zurich-based GAM Investments and reissurer Swiss Re have formed a strategic and long-term partnership to co-manage their catastrophe bonds ( cat bonds ) and insurance-linked securities ( ILS ) investment strategies.

As co-investment manager, Swiss Re will be responsible for investment and portfolio management decisions, while GAM will retain responsibility for risk management oversight and will lead global distribution and product structuring. As well, both firms, they say, will also collaborate on ILS innovation.

Cat bonds – which are issued to provide financial protection against potential losses from natural catastrophes or other perils – allow investors to access an asset class whose returns have low correlation with other financial market asset classes.

The cat bond market, the companies share, continues to grow due to increased demand for risk transfer, primarily driven by economic development, concentration of insured values in exposed areas, changing vulnerability and climate change. The asset class offers investors a scalable and diversifying investment opportunity.

Investors in GAM’s cat bond and ILS funds, the companies share, will now benefit from Swiss Re’s extensive risk knowledge and underwriting expertise, including more than 50 dedicated scientists working in catastrophe risk, over 190 proprietary peril models and approximately 200 terabytes of curated portfolio data.

The funds will be co-managed by SRILIAC, a Swiss Re wholly-owned subsidiary and a US Securities and Exchange Commission registered investment adviser. The SRILIAC unit is led by Mariagiovanna Guatteri, its CEO and CIO, who has more than 20 years’ experience in cat bond portfolio management and natural catastrophe modelling at Swiss Re, including managing its proprietary ILS investments and third-party capital for ILS-related investment strategies.

“The ILS market set new records in 2024 and strong returns on cat bonds have highlighted the attractiveness and diversification value of the asset class for investors,” Guatteri notes. “It is an exciting time for the industry and we see considerable interest both from cat bond issuers and investors.”