As the ILS market grows, so too does secondary trading in this asset class. Intelligent Insurer looks at how a deepening of this side of the market could encourage investors and ultimately benefit re/insurers.
While the use of insurance-linked securities (ILS) continues to grow steadily as a risk transfer mechanism, some believe the key to its long-term success and continued growth is the creation of a deeper secondary market for trading this type of risk.
A larger secondary market would likely encourage new investors and bring a level and depth currently unavailable.
James Slaughter, senior vice president and director of global reinsurance strategy at Liberty Mutual, says that broadening the secondary market would not only encourage new types of investors to move into the space as ILS becomes easier to trade, but it would also create a much more liquid space for them to move into and out of freely.
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ILS, secondary trading, cat bonds, collateralised reinsurance, AHJ Capital Markets, Liberty Mutual, JLT Capital Markets