For insurance-linked securities (ILS) investments that carry potential exposure to losses related to the COVID-19 pandemic, clarity over the loss position is set to take time, according to Luca Albertini, Leadenhall Capital Partners Chief Executive Officer (CEO).
We spoke with the CEO of one of the largest insurance-linked securities (ILS) specialist investment fund managers recently, to find out how the year is progressing so far for his firm and the ILS market as a whole.
Albertini’s firm Leadenhall Capital Partners started 2021 with some $6.4 billion of assets under management and, while there have been catastrophe events so far this year, he remains bullish on the potential for positive returns.
Discussing how 2021 is going at Leadenhall, Albertini explained, “Overall we are satisfied, with highs and lows as it normally happens. On the plus side we are showing stable AUM, we are attracting new investors and we are successfully launching a new investment product.
“Our team has been able to cope with the strains of remote working, and we have added three headcount to our team.”
On the event related side, he also said, “We are of course disappointed with the losses from the Texas winter storm, the European flood and with Hurricane Ida, but that notwithstanding all of our funds are currently expected to report a positive performance for 2021.”
With the COVID-19 pandemic ongoing, but insurance and reinsurance market impacts from it seemingly now slowing, we discussed how the ILS industry has been affected.
Albertini told us that, “We have investments potentially impacted by a creep in Covid-19 related losses,” going on to highlight some of the potential challenges that could persist.
“We are encouraged to see that the industry losses from the event are currently expected to be well below some of the numbers originally discussed, but we understand that there still are a number of disputes on policies wording, reinsurance treaties wording and retrocessional treaties wording and as such we do not believe we will have clarity any time soon,” Albertini cautioned.
The Leadenhall CEO does not see these challenges being overcome particularly quickly either.
Saying that, “The January 1st renewals may drive some extra clarity on some accounts with a disputed claim and a renewal to be negotiated, but I am afraid that we will still be assessing claims this time next year; I hope I am wrong.”
COVID claims could be a factor at the January renewals, especially for some European carriers, Albertini feels.
We’ll have more from our interview with Luca Albertini over the coming days.