ILS investors have been battered by a series of trials in recent years including losses, loss creep, trapped capital and disappointing rate increases. Some may have paused for thought, but there is no sign of the majority walking away yet. Intelligent Insurer reports.
Despite some of the recent challenges they have faced, insurance-linked securities (ILS) investors are not going anywhere, and they will form increasingly deep and complex relationships with the industry. Some may have hesitated after recent losses and they are seeking rate increases, but this amounts to a more nuanced approach to investing as opposed to shunning the industry in the future.
"Investors have changed their view of risk, especially on things such as wildfire, but I expect a mostly orderly renewal."
That is a summary of how commentators characterise the reaction of the ILS sector to several challenging years. Heavy losses caused by a series of cat events in 2017 and 2018 were compounded by several factors, including a significant loss creep on exposed portfolios; trapped capital, a problem compounded by the loss creep; heavy losses from what were previously considered secondary perils, which as wildfires; and a lack of meaningful rate increases despite the rhetoric of many funds suggesting these would transpire.
Aon, Willis Re Securities, S&P Global Ratings, ILS, Insurance, Reinsurance, Mike Van Slooten, Bill Dubinsky, Taoufik Gharib, North America