One reason ILS capital is considered low-cost, efficient and competitive


We often discuss the efficiency of reinsurance capital sourced from capital markets, third-party or alternative sources, as well as its lower-cost nature which can allow it to have a competitive edge over the traditional reinsurance business model.

With some suggesting that the traditional catastrophe reinsurance business model is dying, others suggesting that efficient capital will take segments of the reinsurance market and make them its own, forcing unwelcome change on the markets incumbents, while still more say that low-cost reinsurance capital can out-compete the traditional reinsurer balance sheet, it’s worth looking at what this really means.


Traditional reinsurance model is dying



The traditional catastrophe reinsurance model is dying and won’t exist in ten to 15 years, delegates to the Insurance Day 2014 Summit Bermuda were told yesterday.

This provocative prediction was made during the opening day of the event at the Fairmont Hamilton Princess by a Bermuda market professional.

LGT increases ILS assets to $3.9B, gains new pension fund mandates


Swiss located insurance-linked securities (ILS) and reinsurance-linked investment management firm LGT Insurance-Linked Strategies has increased its ILS assets under management to an impressive $3.9 billion by the mid-point of 2014.

The LGT ILS unit has seen impressive growth in 2014, having started the year with $2.743 billion of assets under management, which it subsequently grew to $3 billion by the end of the first-quarter of the year.

Now, the firm has upped its ILS assets under management again. This time with a significant jump of $900m, helped by the winning of two new mandates from European pension funds during the second-quarter, as well as the inclusion of insurance-linked assets held within the LGT group under the new combined company name of LGT Capital Partners Ltd.

Interview: Niklaus Hilti, Head of Insurance-Linked Securities Strategies, Credit Suisse Asset Management


This interview with Niklaus Hilti, Head of Insurance-Linked Securities Strategies at Credit Suisse Asset Management, discusses the return potential of the insurance-linked securities (ILS) asset class and how to compare this across different strategies.

This interview, fully titled ‘Comparing risk-adjusted returns in insurance-linked strategies‘ is taken from the recently published report by specialist financial services, pensions and investments publisher Clear Path Analysis, titled Insurance-Linked Securities for Institutional Investors 2014.’ Clear Path Analysis have kindly allowed Artemis to republish it here in full.

Interview participant:

– Niklaus Hilti, Head of Insurance-Linked Securities Strategies, Credit Suisse Asset Management.


– Jessica McGhie, Senior Publisher, Clear Path Analysis.

ILS manager Entropics approved for cat bond investing by Swedish FSA


The first insurance-linked securities (ILS) fund manager based in Scandinavia has now received its license from the financial regulator. Entropics Asset Management AB from Sweden has now been approved to begin investing by the Swedish FSA.

Entropics Asset Management AB, the first Swedish ILS asset manager who will specialise in catastrophe bond investments, said that it has received its authorisation to operate as it has now received its license from Finansinspektionen, the Swedish Financial Supervisory Authority, to carry out discretionary portfolio management.

Entropics will begin operations with a UCITS catastrophe bond fund, making it one of the ten ILS managers worldwide offering this type of UCITS compliant strategy which many investors are now familiar with. Entropics management aim to deliver attractive risk adjusted returns, with very low correlation to other asset classes, to its investors.

Use ILS to reduce emerging market government nat cat exposures, say panelists


Governments from emerging markets should harness insurance-linked securities and the collateralized reinsurance space to address the financial losses arising from natural catastrophes, industry experts have argued.

At the C5 Reinsurance and Capital Markets Convergence Forum in London on July 8 and July 9, panelists and speakers discussed how to address the gap between insured and economic losses arising from natural catastrophes.

In countries with a low primary insurance penetration, governments are left to foot the often substantial bill arising from a natural catastrophe. Typhoon Haiyan, which tore through the Philippines in November 2013, racked up an economic loss of $10 billion — 5% of the Philippines’ total economic output — but only $700 million in insured losses.

Эксперты Лондонского форума конвергенции перестрахования и рынков капитала: «Использование ILS уменьшает подверженность правительств стран с развивающейся экономикой убыткам от природных катастроф»


Правительства стран с развивающейся экономикой должны использовать инструменты ILS для устранения финансовых потерь, связанных с природными катастрофами, заявили эксперты отрасли.

На прошедшем в Лондоне 8 и 9 июля форуме C5 по конвергенции рынков перестрахования и капитала, участники дискуссии и докладчики обсудили, как минимизировать разрыв между застрахованными и экономическими потерями от природных катастроф.

В странах с низким уровнем охвата первичным страхованием правительства, как правило, самостоятельно несут убытки, вызванные природными катастрофами. Тайфун «Хайян» ударивший по Филиппинам в ноябре 2013 года привел к экономическим потерям в размере 10 млрд. Долл. США или 5% от размера ВВП, тогда как покрытыми страхованием из этой суммы оказались только 700 млн.

Reinsurers — alternative capital is a friend, not a foe, say panelists


The global reinsurance community could reap big rewards if it stopped erecting barriers between traditional reinsurance and alternative capital markets, industry experts said at the C5 Reinsurance and Capital Markets Convergence Forum in London on July 8.

But despite the potential benefits of the two sides working together rather than against each other, some reinsurers could find such a rapprochement hard to stomach.

After all, the surge of alternative capital has been identified as the major driver in the softening reinsurance market, which saw further declines in pricing at the July 1 renewals. As a result, traditional reinsurers are struggling to make margins — and in some parts of their industry, insurance-linked securities are seen as the enemy.