Credit Suisse: Haiyan not expected to impact IRIS Low Volatility ILS fund

by Artemis on November 13, 2013

Insurance-linked securities and reinsurance-linked investment manager Credit Suisse has released a statement saying that it does not expect any impact from the devastating super typhoon Haiyan, which struck the Philippines, to its IRIS Low Volatility Plus ILS fund.

Credit Suisse reports on the impact of events through the London Stock Exchange due to its position as the investment manager in the CS IRIS Low Volatility Plus Fund which is the master fund to the London listed DCG Iris ILS fund.

In its report Credit Suisse acknowledged the devastating impact of super typhoon Haiyan, which has affected up to 10 million people, displaced as many as 650,000 and estimates suggest killed more than 10,000, while causing widespread destruction to buildings and the Philippines infrastructure.

Due to the extreme nature of the winds and the impact caused by super typhoon Haiyan, Credit Suisse said that it is likely to become the most expensive natural disaster in the history of the Philippines in terms of economic loss. However, due to low levels of insurance penetration the insured loss is likely to be low for an event of this size, explained Credit Suisse, although subject to some uncertainty.

Credit Suisse said; “Based on the currently available information and our portfolio analysis, we do not expect an impact on the IRIS Low Volatility Plus Fund from this event.” This applies to the DCG Iris ILS fund as well.

Other estimates Artemis has seen suggest an estimated insurance industry loss of up to $2 billion. This is unlikely to trouble reinsurers but could begin to eat into certain layers of risk which either collateralized players are writing for diversification or within retro contracts.

If there is any impact to any funds under Credit Suisse’s management it is more likely to be within its IRIS Enhanced, higher risk, fund, rather than the low volatility funds which target lower risk investment assets.

It will take time for the full-scale of loss in the Philippines to become clear, the relief effort is of far more importance right now. For the ILS and reinsurance market the question should be how can it take on more exposure in these developing regions of the world to provide disaster risk financing in order to assist with reconstruction after such tragic catastrophe events.

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