Asia to become increasingly relevant in life insurance-linked securities

Globally, the life insurance-linked securities (ILS) space is gaining momentum and in Asia specifically, the risk/return profile appears to be improving, according to Luca Tres, Head of Life, Securis Investment Partners.

Tres, alongside Tom Spreutels, Head of Origination, Life & Alternative Credit at Leadenhall Capital Partners, participated in an expert panel debate focused on the life ILS sector at the virtually held Artemis ILS Asia 2020 event.

As life ILS continues to gain traction across the globe, while remaining in its infancy in many regions, this panel had a focus on education and awareness for Asian investors and cedants.

Both Tres and Spreutels discussed life ILS strategies at their respective firms, what they look for in an investment and how their strategies have a strong focus on the uncorrelated opportunities at hand.

After an in-depth overview of life ILS, the pair took questions from the audience and, attendees were eager to hear their thoughts on the potential for life ILS to gain traction in Asia.

“I definitely see Asia being a key investor base for us,” said Tres. “The Asian investor base is key for the ILS community, I’m not saying anything new there.

“From the cedant standpoint, the picture is a little more complicated. I have worked on opportunities in Asia for a long time. The reality is that we turn down most of them, not all of them, because we didn’t think the risk/reward was appropriate for our funds.”

According to Tres, in Asia, there has historically been a mix of returns being too low alongside challenges from the risk not being well priced.

“So, we have turned away actually pretty much all transactions that we have seen from Asia over the last few years. It’s worth mentioning though that in the last two to three months, we have seen transactions coming through from Asia and they are starting to look much more in-line with our risk/reward.

“So, I would expect Asia to become more and more relevant in global life ILS in the near future. And, I certainly hope so. I mean, if you think about where the growth can come from in terms of cedants, Asia should be there,” continued Tres.

Spreutels also commented on the potential for growth in Asia and whether his firm is finding any attractive opportunities in the region at this time.

“We look at it, but the opportunity needs to be right, the economics need to be right, and also importantly, the framework,” he explained. “Can we get comfortable with some of the additional risks that we don’t really have to worry about when we do business and operate in the U.S.? Do we really understand its regulatory regime? And, has it been truly tested?”

Adding, “We’ve not been able to come to the landing in finding that right opportunity that hits all of the boxes so that we can make the investment, make the effort, spend the time truly understanding the environment, the regime, that is to go an invest. But, we would welcome it from a diversification point of view.”

View this video in full below:

Every session from the conference is now available to view on-demand.

As well as the on-demand playback, we will be archiving every session from our online and virtual ILS Asia 2020 conference over on our YouTube Channel in the coming weeks.