Careful handling of end-investors crucial in major manager transitions

Handling end-investor relationships with care during periods of significant transitions is proving to be crucial in the financial industry in 2025. Several leading ILS managers are currently undergoing substantial changes that require delicate management. For instance, Fermat Capital Management, the largest ILS manager, recently severed ties with their former distribution and white label partner, the Swiss asset manager GAM. Additionally, Twelve Capital and Securis Investment Partners have combined forces, resulting in the establishment of Twelve Securis as a unified entity. Although these situations are distinct, as one involves a merger and the other marks the end of a distribution agreement, both represent significant recalibrations for top-tier ILS managers, posing potential implications for crucial investor relationships that demand careful handling.

All major transitions in the financial sector have the potential to raise concerns among investors, prompting them to closely scrutinize the existing relationships and anticipate the future landscape. Any alterations in key personnel or strategic direction necessitate nuanced negotiation and transparent communication with end-investors. Following the disconnection with GAM, Fermat faces the loss of an established distribution network, including access to the GAM friends and family network. The collaboration between Fermat and GAM, dating back to the early 2000s, culminated in the launch of the FCM Cat Bond Fund in 2011, a strategy that amassed $140mn in GAM client assets. Despite the long-standing partnership, indications suggest that Fermat’s fundraising efforts have remained steady with the successful growth of Fermat-branded UCITS and commingled ILS funds, mitigating any adverse impact thus far.

Conversely, GAM has taken steps to expand its ILS offerings by assuming sole management of the flagship GAM Star Cat Bond Fund and other ILS funds, in collaboration with Swiss Re Insurance-Linked Investment Advisors Corporation. This move was accompanied by a fee reduction on the institutional class of shares to enhance competitiveness. Notable developments within GAM include the appointment of Rom Aviv, a former executive director from Twelve Capital, to spearhead the expansion of the ILS business and fortify the partnership with Swiss Re. The strategic hiring decision hinted at GAM’s intention to centralize control within Switzerland, thereby fostering growth and adaptability within the firm.

On the fundraising front, Fermat has made significant strides by introducing the Fermat-branded commingled ILS offerings last year and launching the Fermat UCITS Cat Bond Fund. These initiatives have propelled Fermat’s UCITS and commingled ILS funds to amass approximately $4.5bn in Assets under Management (AuM). Notably, the UCITS strategy alone accounted for $1.6bn in AuM by the end of May. To bolster their investor relations capabilities, Fermat augmented its in-house team by recruiting Greg Hickling and Christopher Hoenig, focusing on the Asia-Pacific region and Europe, respectively. Hoenig, previously associated with GAM as the head of distribution in Germany, brings valuable expertise to Fermat’s investor relations endeavors, underlining the firm’s commitment to fostering enduring partnerships amidst industry transitions.