NETHERLANDS - PME, the €20.5bn fund for Dutch metalworkers, is to put up to €400m - or 2% of its total assets - into the emerging asset class of securitised life insurance policies or life settlements.
In the constant search for diversification via uncorrelated asset classes, Dutch pension funds are turning to life insurance policies.
"I can confirm that in the long run, we intend to put 2% of our AUM into
this asset class, but won't go into details such as the provider," Roland van den Brink, chief investment officer at the Dutch metal scheme Metalektro PME, confirmed to IPE.
Life settlements are insurance policies that are surrendered early by their holders to third parties. So far hedge funds have been the main investors in these asset class but European and US institutional investors are catching up.
According to figures collected by research Sanford C. Bernstein in New York, the market issuance of life settlements rose by $10bn (€7.4bn) between 2004 and 2005 to $23bn. Annualised returns lie somewhere between 8% to 11%.
According to US magazine Pensions & Investments the €25bn multiemployer pension manager Cordares, Amsterdam, plans to launch a pooled fund in the asset class for Dutch pension plans.