Amlin to launch insurance bond fund venture

LONDON, May 6 (Reuters) - London-listed insurer Amlin Plc (AML.L: Quote, Profile, Research) said on Tuesday it is to launch a new venture that will manage funds on trading insurance risk.

The investment management company, which will be led by two industry veterans in insurance-linked securities, is the first to be backed by a Lloyd's of London [LOL.UL] insurer, Amlin said.

Luca Albertini, the former head of Swiss Re's (RUKN.VX: Quote, Profile, Research) European insurance-linked securities team, will be the chief executive of the new venture.

John Wells, who spent nearly 20 years as an investment banker at NatWest and was a founder member of Swiss Re's financial products division, will be chairman of the new firm.

Amlin will also be an investor in the new company's first fund, which is set to be launched later this year. It aims to become a player in the insurance securities market to help it manage its risks and capital better and to generate returns from the growth and high margins available in this business, it said.

The company declined to state how much money it hopes to raise or how much money it will invest.

The insurance securities market for instruments such as catastrophe bonds, which are issued by insurers to transfer the financial hit from catastrophes, has grown rapidly to become a market of over $38 billion and may grow further despite the meltdown in the credit markets.

Increasing numbers of insurers and reinsurers are looking to issue bonds to protect themselves from the potential for the prospect of a $100 billion "mega-catastrophe", as the flow of people into disaster-prone areas such as Florida has continued unabated.

A growing number of investors are becoming attracted to investing in these securities because their risks are relatively clear, in contrast to other structured credit products. (Reporting by Simon Challis; Editing by Andrew Callus)