POLAR CAPITAL       Insurance Portfolio Fund       Citywire Montreux       11th-13th May 2011This is a new product proposa...
Introduction  •   A leading financials fund specialist  •   Acquired by Polar Capital in September 2010  •   5 strong inve...
Fund performance              220              200              180              160              140          %          ...
Investment philosophy •   Internal research driven •   Invest in companies we understand •   30/35 stock portfolio •   Man...
Portfolio construction • Property/casualty insurers account for c. 90% of the portfolio • Life and composite insurers acco...
Value creation in the non-life insurance sector  • Shares prices historically track book value growth and dividends  • Thi...
Long term improvement in pricing through the cycle• Robust reinsurance pricing encourages discipline• Systems advance aid ...
Reinsurance pricing  • 2011 catastrophe pricing down 5-10% at key 1 January renewal - US catastrophe rates    remain histo...
Reinsurance pricing vs Catastrophe Losses                                                                                 ...
Insurance pricing    • Rate declines bottomed in mid 2008 but have struggled to improve due to the tough      economic env...
US / Bermuda companies trading at 25 year low                            D&P P/C (RE)INSURANCE COMPOSITE PRICE TO STATED B...
Attractive returns over the long term • Sector performance typically counter-                                             ...
Summary• Book values continue to grow at                                                    Dow ling & Partners (Re)insura...
Hiscox Insurance Portfolio Fund – 28 April 2011                                                                           ...
Fund summary     • Only European fund dedicated to investing in the insurance industry worldwide     • Structure: UK domic...
Contact Details For further information on the fund please contact either: International James Brandt          james.brand...
Polar Capital Overview      As at 31st March 2011Polar Capital was                                         Total Assetsest...
Appendix                18POLAR CAPITAL
Fund managers  Alec Foster – Fund Manager                    Alec Foster joined Polar Capital in September 2010 and is man...
Investment team                John Yakas joined Polar Capital in September 2010 and is the manager of the Polar Capital A...
Polar Capital                                                                                                             ...
Polar Capital                                                                                                             ...
Polar Capital                                                                                                             ...
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Polar captial insurance portfolio fund citywire 2011

  1. 1. POLAR CAPITAL Insurance Portfolio Fund Citywire Montreux 11th-13th May 2011This is a new product proposal for one-on-one use with non-US professional investors only 1
  2. 2. Introduction • A leading financials fund specialist • Acquired by Polar Capital in September 2010 • 5 strong investment team with unique skills and 94 years combined experience • Balanced portfolio of funds with excellent track records Outperformance since launch* Polar Asian Financial Fund (Dec 1996) +125.6% Polar European Financial Fund (Mar 1993) +133.6% Hiscox Insurance Fund (Oct 1998) +94.9% Polar Financial Income Fund (Oct 2009) +21.3% • Ongoing relationship with Hiscox Group, including advice on $4bn investment portfolio * Outperfomance as at 28 April 2011 for the funds’ respective benchmarks: Datastream Asia ex Japan Financials Index, Datastream European Financials Index, Datastream World Insurance Index and Dow Jones STOXX Financial Index respectively. 2POLAR CAPITAL Please refer to the important information at the end of this presentation
  3. 3. Fund performance 220 200 180 160 140 % 120 100 80 60 Oct-98 Nov-99 Dec-00 Jan-02 Feb-03 Mar-04 Apr-05 May-06 Jun-07 Jul-08 Aug-09 Sep-10 Hiscox Insurance Portf olio Fund (£) Datastream World Insurance Index (£) MSCI World Index (£) Source: Williams De Broe (28 April 2011) April(%) YTD (%) 1 yr (%) 5yrs (%) Launch (%)Hiscox Insurance Portfolio Fund (£) +0.1 +0.6 +5.8 +19.4 +110.1Datastream World Insurance Index (£) -0.2 +1.9 +3.2 -10.4 +15.2MSCI World Index (£) +0.2 +1.4 +6.1 +10.4 +41.0 Source: Polar Capital (28 April 2011) 3POLAR CAPITAL Please refer to the important information at the end of this presentation
  4. 4. Investment philosophy • Internal research driven • Invest in companies we understand • 30/35 stock portfolio • Management ownership • Long term investors 4POLAR CAPITAL Please refer to the important information at the end of this presentation
  5. 5. Portfolio construction • Property/casualty insurers account for c. 90% of the portfolio • Life and composite insurers account for under 5% of the portfolio • Strong quality overlay – stocks are held for the long term • Mid-cap focus with strong emphasis on US, Bermuda and UK • Significant US Dollar exposure both direct and by nature of sector 5POLAR CAPITAL Please refer to the important information at the end of this presentation
  6. 6. Value creation in the non-life insurance sector • Shares prices historically track book value growth and dividends • This broke down in 2007 as we entered the financial crisis and insurance rates continued to soften • To the end of 2010, the Fund has compounded share price growth of c.7% p.a. vs 12% p.a. compound growth in book value and dividends HIP Price Tracked Book Value Grow th Until End 2007 280.0% 230.0% 180.0% 130.0% 80.0% 30.0% -20.0% Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- Apr- Oct- 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 10 10 Implied HIP Book Value HIP Price Source : Polar Capital 6POLAR CAPITAL Please refer to the important information at the end of this presentation
  7. 7. Long term improvement in pricing through the cycle• Robust reinsurance pricing encourages discipline• Systems advance aid risk management, pricing• Rating agencies/ Regulators/Sarbanes – Oxley• WTC terrorist attack changed insurance buying and improved underwriting Source : Swiss Re 7POLAR CAPITAL Please refer to the important information at the end of this presentation
  8. 8. Reinsurance pricing • 2011 catastrophe pricing down 5-10% at key 1 January renewal - US catastrophe rates remain historically attractive • Overall 2010 catastrophes have been estimated at $43bn compared with $29bn for 2009 (Source: Swiss Re). This was despite no significant US Atlantic hurricanes making landfall. • 2010 was second costliest year on record for earthquakes with Chile costing $8bn and New Zealand $4.4bn. • BP Deepwater Horizon disaster driving energy rates up over 30%. Increased demand for “top-up” covers • $15bn of catastrophes in 1Q11 (Australia flooding, /Cyclone Yasi and Christchurch New Zealand Earthquake) even before the Japan Earthquake on 11 March. These losses are likely to be sufficient to turn reinsurance rates upward in near term. 8POLAR CAPITAL Please refer to the important information at the end of this presentation
  9. 9. Reinsurance pricing vs Catastrophe Losses 9POLAR CAPITAL Please refer to the important information at the end of this presentation
  10. 10. Insurance pricing • Rate declines bottomed in mid 2008 but have struggled to improve due to the tough economic environment and financial market recovery (rebuilding balance sheet) • Loss development due to recession (financial institutions, trade credit, political risk) and heightened loss activity (aviation, energy) has accelerated rate rises in specific classes • Recent underwriting losses are expected to influence pricing • Terms and conditions remain firm • The premium drag from the declining economic environment appears to be easing and demand for insurance is increasing. Q410 was the first uplift in exposures since mid 2008 for a number of companies • Increasing signs of pain in the market with some companies having to materially increase loss reserves 10POLAR CAPITAL Please refer to the important information at the end of this presentation
  11. 11. US / Bermuda companies trading at 25 year low D&P P/C (RE)INSURANCE COMPOSITE PRICE TO STATED BOOK VALUE 210% Ex. AIG and Berkshire Hathaway Commercial lines pure rate increases peak near 50% WTC 190% Cheating phase "bubble" Subprime/Credit hits Rates "roll" Katrina 170% 150% 130% Rates Begin To Rise 110% Northridge EQ Current = 91% Hurricane Andrew 90% Internet "Bubble" Peak 70% Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 (Source : Dowling & Partners as at 4/4/11) Average price to book (to 31 March 2011): 1 year 3 years 5 years 10 15 20 years years years 91% 98% 117% 131% 138% 141% Source: Dowling & Partners 11POLAR CAPITAL Please refer to the important information at the end of this presentation
  12. 12. Attractive returns over the long term • Sector performance typically counter- Hiscox FTSE S&P cyclical, offering portfolio diversification Insurance All-Share 500 Portfolio Index Index • Unusual lack of valuation differentials for quality companies - opportunities for stock 2008 -0.8% -32.7% -38.5% pickers 2010 +16.8% +10.9% +12.8% Source: Williams De Broe, Bloomberg (31 December 2010) • Historically, (re)insurers have delivered sustained performance across different economic cycles, insurance cycles, investment markets 12POLAR CAPITAL Please refer to the important information at the end of this presentation
  13. 13. Summary• Book values continue to grow at Dow ling & Partners (Re)insurance industry share repurchases 6,000 200% c. 10-15% p.a. 5,000 180%• Attractive returns even without re-rating 4,000 160% 3,000 140%• Quality companies trading at or below 2,000 120% book value 1,000 100% 0 80% Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410• Companies continue to return capital through special dividends and buybacks $m repurchased (LHS) Average P/B paid (RHS) Source: Dowling & Partners• M&A has picked up (Zenith National; Max Capital/Harbor Point merger; Brit/private equity)• Early indications of an imminent upturn in rates could act as a catalyst for a sector re-rating 13POLAR CAPITAL Please refer to the important information at the end of this presentation
  14. 14. Hiscox Insurance Portfolio Fund – 28 April 2011 Top 10 holdings: Broke r Arch Capital 6.8% 4.1% PartnerRe 6.1% Life & He alth Cash WR Berkley 5.9% 4.5% 4.6% Berkshire Hathaway ‘B’ 5.7% Composite ACE 4.7% 5.9% Comme rcial Transatlantic Holdings 4.4% 38.1% Munich Re 4.2% Lloyds Amlin 4.1% 6.3% Markel 3.8% Alleghany 3.3% Re tail Geographical breakdown: 7.1% US 45.9% Bermuda 26.0% Re insurance 29.4% UK 13.2% Europe 10.4% Cash 4.6% Source: Polar Capital as at 28 April 2011 14POLAR CAPITAL Please refer to the important information at the end of this presentation
  15. 15. Fund summary • Only European fund dedicated to investing in the insurance industry worldwide • Structure: UK domiciled OEIC to be collapsed into Polar UCITS at the end of May 2011. • Launch date: 19 October 1998 • 11 year track record with same manager • $196.1 million AUM as at 28 April 2011 15POLAR CAPITAL Please refer to the important information at the end of this presentation
  16. 16. Contact Details For further information on the fund please contact either: International James Brandt james.brandt@polarcapital.co.uk Tel: 0207 227 2708 Clarissa Watkins clarissa.watkins@polarcapital.co.uk Tel: 0207 227 2749 UK Iain Evans iain.evans@polarcapital.co.uk Tel: 0207 227 2740 Richard Oates richard.oates@polarcapital.co.uk Tel: 0207 227 2732 Polar Capital 4 Matthew Parker Street London SW1H 9NP Tel: 0207 227 2700 www.polarcapital.co.ukPOLAR CAPITAL
  17. 17. Polar Capital Overview As at 31st March 2011Polar Capital was Total Assetsestablished in 2001 Ownership Under Management Fundsand has $3.9bn AUM, $3.9bn Ben Rogoff 2 fundswith 66 employees. Free Float Technology USD 1,402m 25% Nick Evans Polar CapitalThe Firm was listed on Caledonia 14% 50% Business Japan James Salter USD 1,063m XL Gerard Cawleythe London Stock 11% InfrastructureExchange (AIM) in Philip Hardy 2 funds UKFebruary 2007. The Nick Shenton USD 171m Sales and Marketingfirm offers managers alevel of infrastructure Management European Robert Gurner 2 funds USD 575mand corporate Operational Supportgovernance normally Tim Woolley Dan Mahony 2 funds Healthcarefound in much larger CEO/ Co- Founder Gareth Powell USD 233m Risk Managementorganisations John Yakas Tom Bartlam 4 funds Financials Alec Foster Non Executive Chairman USD 296m Compliance Nick Brind John Mansell William Calvert 2 funds Emerging Market Chief Operating Officer USD 96m Technology David Keetley USD 39m Convertibles Finance POLAR CAPITAL
  18. 18. Appendix 18POLAR CAPITAL
  19. 19. Fund managers Alec Foster – Fund Manager Alec Foster joined Polar Capital in September 2010 and is manager of the Hiscox Insurance Portfolio Fund together with Nick Martin. Alec has 43 years experience in the insurance business, initially as an insurance broker in the London market. He joined Hiscox plc in 1976 and became group investment officer as well as managing director of Hiscox Investment Management Ltd prior to the management buyout in 2007 when the business was renamed HIM Capital Ltd. Alec launched the Hiscox Insurance Portfolio Fund in 1998. He was also non executive chairman of Universal Salvage plc and a non executive director of Midas Capital Partners. He is currently non executive chairman at Navigators Underwriting Agencies Ltd. Nick Martin – Fund Manager Nick Martin joined Polar Capital in September 2010 and is co-manager of the Hiscox Insurance Portfolio Fund, working closely with Alec Foster. He has 12 years experience in the financial services industry. He joined Hiscox plc in September 2001 working with Alec Foster at Hiscox Investment Management Ltd prior to participating in its management buyout in 2007 when the business was renamed HIM Capital Ltd. He has developed a broad knowledge of the insurance sector during this time and from working for the chartered accountants, Mazars Neville Russell, where he specialised in audit and consultancy work for insurance companies and brokers. He is a qualified chartered accountant and obtained a first class honours degree in Econometrics and Mathematical Economics at the London School of Economics. 19POLAR CAPITAL
  20. 20. Investment team John Yakas joined Polar Capital in September 2010 and is the manager of the Polar Capital Asian Financials Fund and Polar Capital European Financials Funds. John has over 20 years experience in the financial services industry and has been involved with the Asian Financials Fund since its launch in 1996 and has also been responsible for the European Financials Fund for the past three years. Previously, he worked for HSBC in Hong Kong and was the head of Asian research at Fox-Pitt, Kelton in 1995 and established their office in Hong Kong in 2000. John joined Hiscox Investment Management in 2003 (subsequently HIM Capital). George Barrow joined Polar Capital in September 2010 and is an investment analyst working closely with John Yakas on the Polar Capital European Financials Fund and the Polar Capital Asian Financials Fund. He was previously at HIM Capital from 2008 where he completed his IMC. George holds a Masters degree in International Studies from SOAS where he graduated with merit. Nick Brind joined Polar Capital in September 2010 and is manager of the Polar Capital Financials Income Fund. He has 16 years investment experience across a wide range of asset classes including UK equities, closed end funds, fixed-income securities, European financials, private equity and derivatives. Prior to joining HIM Capital, Nick managed a high-income financials fund investing in the equity and fixed-income securities of European financial companies at New Star Asset Management. He also co-managed a mid-market private equity fund-of-funds and had previously worked at Exeter Asset Management and Capel-Cure Myers. 20POLAR CAPITAL
  21. 21. Polar Capital Four Matthew Parker Street London SW1H 9NPHouse viewThis document has been produced based on Polar Capital research and analysis and represents our house view. All sources are Polar Capital unless otherwise stated.Important informationThe information provided in this presentation is for the sole use of those attending the presentation it shall not and does not constitute an offer or solicitation of an offer to make aninvestment into any fund managed by Polar Capital. It may not be reproduced in any form without the express permission of Polar Capital and is not intended for private investors.This presentation is only made available to professional clients and eligible counterparties. Shares in the fund should only be purchased by professional investors. Any other personwho receives this presentation should not rely upon it. The law restricts distribution of this document in certain jurisdictions, therefore, persons into whose possession this documentcomes should inform themselves about and observe any such restrictions.This document does not provide all information material to an investor’s decision to invest in the Polar Capital Funds Plc – Hiscox Insurance Portfolio Fund, including, but notlimited to, risk factors. For more information, please refer to the fund’s offer document and read it carefully before you invest.Statements/Opinions/ViewsAll opinions and estimates in this report constitute the best judgment of Polar Capital as of the date hereof, but are subject to change without notice, and do not necessarilyrepresent the views of Polar Capital. Polar Capital is not rendering legal or accounting advice through this material; readers should contact their legal and accounting professionalsfor such information.Third-party dataSome information contained herein has been obtained from other third party sources and has not been independently verified by Polar Capital. Polar Capital makes norepresentations as to the accuracy or the completeness of any of the information herein. Neither Polar Capital nor any other party involved in or related to compiling, computing orcreating the data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties herebyexpressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. 21POLAR CAPITAL
  22. 22. Polar Capital Four Matthew Parker Street London SW1H 9NPHoldingsThis portfolio data is “as of” the date indicated and should not be relied upon as a complete or current listing of the holdings (or top holdings) of the fund. The holdings mayrepresent only a small percentage of the aggregate portfolio holdings, are subject to change without notice, and may not represent current or future portfolio composition.Information on particular holdings may be withheld if it is in the fund’s best interest to do so. A complete list of the portfolio holdings may be made available upon request. Itshould not be assumed that any of the securities transactions or holdings discussed was or will prove to be profitable, or that the investment recommendations or decisions wemake in the future will be profitable or will equal the investment performance of the securities discussed herein. The information provided in this document should not beconsidered a recommendation to purchase or sell any particular security.BenchmarksThe following benchmark indices is used: Datastream World Insurance Index, MSCI World Index FTSE and S&P. These benchmarks are generally considered to berepresentative of the world insurance universe. This benchmarks is a broad-based index which are used for comparative/illustrative purposes only and have been selected as it iswell known and is easily recognizable by investors. Please refer tohttp://thomsonreuters.com/products_services/financial/financial_products/investment_management_research/portfolio_management/datastream, and .http://www.standardandpoors.com/home/en/us and http://www.ftse.com/ for more information and www.msci.com Comparisons to benchmarks have limitations becausebenchmarks have volatility and other material characteristics that may differ from the fund. For example, investments made for the fund may differ significantly in terms of securityholdings, industry weightings and asset allocation from those of the benchmark. Accordingly, investment results and volatility of the fund may differ from those of the benchmark.Also, the indices noted in this presentation are unmanaged, are not available for direct investment, and are not subject to management fees, transaction costs or other types ofexpenses that the fund may incur. In addition, the performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore,investors should carefully consider these limitations and differences when evaluating the comparative benchmark data performance. The information regarding the indices areincluded merely to show the general trends in the periods indicated and is not intended to imply that the fund was similar to any of the indices in composition or riskRegulatory statusThis document is Issued in the UK by Polar Capital.Polar Capital LLP is a limited liability partnership number OC314700. It is authorised and regulated by the Financial Services Authority. A list of members is open to inspection atthe registered office, 4 Matthew Parker Street, London SW1H 9NP 22POLAR CAPITAL
  23. 23. Polar Capital Four Matthew Parker Street London SW1H 9NPInformation subject to changeThe information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information inany way.ForecastsReferences to future returns are not promises or even estimates of actual returns Polar Capital may achieve, and should not be relied upon. The forecasts contained herein arefor illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. In addition, the forecasts are based upon subjective estimates andassumptions about circumstances and events that may not yet have taken place and may never do so.PerformancePerformance is shown net of fees and expenses and includes the reinvestment of dividends and capital gain distributions. Many factors affect fund performance includingchanges in market conditions and interest rates and in response to other economic, political, or financial developments. Investment return and principal value of your investmentwill fluctuate, so that when your investment is sold, the amount you receive could be less than what you originally invested. Past performance is not a guide to or indicative offuture results Future returns are not guaranteed and a loss of principal may occur. Investments are not insured by the FDIC (or any other state or federal agency), are notguaranteed by any bank, and may lose value .Investment process - RiskNo investment process or strategy is free of risk and there is no guarantee that the investment process or strategy described herein will be profitable. Investors may lose all oftheir investments.AllocationsThe strategy allocation percentages set forth in this document are estimates and actual percentages may vary from time-to-time. The types of investments presented herein willnot always have the same comparable risks and returns. Please see the private placement memorandum for a description of the investment allocations as well as the risksassociated therewith. Please note that the fund may elect to invest assets in different investment sectors from those depicted herein, which may entail additional and/or differentrisks. The actual performance of the fund will depend on the Investment Manager’s ability to identify and access appropriate investments, and balance assets to maximize returnto the fund while minimizing its risk. The actual investments in the fund may or may not be the same or in the same proportion as those shown herein.All photography © Martin Hartley 23POLAR CAPITAL

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