A fund that can profit from insuring the risks we all face
The insurance sector is embarking on an upswing and boasts steady long-term returns, says Max King. This fund could help you profit.

Earlier this year the global insurance industry was under pressure. Claims for losses from the Australian and Californian wildfires were coming in, Covid-19 was expected to lead to an avalanche of claims for lost business and the hurricane season lay ahead. But the hurricane season passed without serious incident, the wildfire losses are quantified and those from the pandemic are proving manageable.
Steep rises in premiums
As a result, “this is a fantastic time” to consider the sector, says Nick Martin, manager of Polar Capital’s £1.4bn Global Insurance Fund. “Covid-19 has accelerated the insurance-pricing cycle, creating the best underwriting market in at least a decade.” Marsh & McLennan’s global pricing index, which tracks premiums, rose at an annual rate of 20% in the third quarter after 19%, 14% , 11% and 8% in previous quarters.
There are no investment trusts focused on the sector, while direct exposure in the UK is largely confined to the life insurance, household and retail markets. Polar’s fund has 16% exposure to the UK, but 78% to North America and avoids the savings-orientated life sector. About 43% of the portfolio is in commercial insurance, 18% in retail, 14% in reinsurance and 11% in insurance brokers, with weightings changing according to the insurance cycle.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
“Insurance is a must-have product, often required by law,” says Martin. “The role of the insurance industry is to take on the volatility from unexpected perils that individuals and companies do not want. If the underwriters price that risk appropriately, they will earn a good profit.” The fund was launched over 20 years ago by veteran expert Alec Foster as a Hiscox fund, but it moved to Polar in 2011. The current team have been managing the fund for over 15 years. It invests in 30-35 stocks with low turnover, targeting an 8%-9% annual return from a “conservative” 9%-10% annual growth in book value. Until earlier this year, when the price dropped by 25% (it has since partly recovered), volatility was low, reflecting shrewd management and good diversification.
“US industry valuations are really attractive at about 120% of book value,” says Martin, “down from 150% at the start of the year and halfway between the 30-year average of 135% and the 95%-100% levels we saw in the great financial crisis. We don’t think the fall in valuation is justified. Good insurers will come out of the pandemic with solid results and as a result of the losses, prospects over the next couple of years are very, very strong.” Book values were flat in the first half, but are estimated to have risen by 3% in the third quarter.
Neither growth nor value
The insurance sector is neither high-growth nor a clear value proposition, just a very attractive, but out-of-favour, sector with steady long-term returns. The Polar fund combines experienced management with a long-term record of outperformance; 2.5% per annum ahead of the MSCI insurance sector over five years, but 5% ahead since launch. Annualised performance of 9.2% lags the tech-driven MSCI World index by 3% over five years but, at 8.8%, is 2% ahead since launch, and that is for the relatively expensive “retail” share class, charging 1.25% per annum. Those fees are reduced to 0.75% in the “institutional” share class, available through some platforms.
As Martin points out, “the insurance industry is in the risk business and over time we have seen a relentless rise in risks. New ones are always emerging; wildfires, pandemics and cyber-events, perhaps enhanced by working from home. As long as we have severe weather, catastrophes, accidents, human negligence and ignorance, there will be robust demand for insurance”.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.
After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.
-
Is investing in AIM still worth it after IHT clampdown?
HMRC expects to rake in £110 million a year from upcoming inheritance tax changes on AIM shares. The tax relief will be cut from April 2026, meaning you could find yourself paying 20% in inheritance tax.
By Katie Williams
-
AI in finance: how is technology changing financial advice?
There are huge opportunities for AI to improve and democratise financial services, particularly financial advice. But is the regulatory environment ready for AI to become mainstream in finance?
By Dan McEvoy
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocks
Opinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
By Cris Sholto Heaton
-
BP's 'long, painful decline' – and why next year could be even tougher
Opinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
By Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global markets
Opinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
By Peter Walls
-
Falling revenues and mounting debt spell trouble for Jumia Technologies
Struggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
By Dr Matthew Partridge
-
Next reports £1 billion in annual profits for the first time – what's next for the retailer?
Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
By Dr Matthew Partridge
-
Best of British bargains: cash in on undervalued companies in the UK stock market
Opinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
By Michael Field
-
Building firm Keller presents low debt and ample scope for growth
Geotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
By Dr Mike Tubbs
-
PZ Cussons share price down 75% in last decade – why it's one to watch
Opinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
By Jamie Ward