Swiss Re Insurance-Linked Fund Management

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ILS funds still tracking at highest Index performance since 2007


The returns possible in insurance-linked securities (ILS) investments remains at a near record, as the Eurekahedge ILS Advisers Index continues to track at its highest performance level since 2007.

ILS fund and cat bond fund performance returns IndexThe data is now in for April 2023, with the average return of ILS funds tracked by the Index reaching +1.12%. That is the highest ever April performance for the Index of ILS funds.

For the first four months of 2023, the average return of ILS funds tracked by ILS Advisers for this Index now stands at 4.27%.

Which impressively and also underscoring the challenging years of reinsurance industry losses of late, is already the highest figure for a calendar year since 2016.

The catastrophe bond market continued to lead the way in April, despite the spread tightening which ILS Advisers notes is unusual for a period outside of the peak wind season.

But, overall cat bond prices still rose by0.79% in April, driving a +1.74% total return for the Swiss Re Global Cat Bond Index.

The pure cat bond funds tracked by this Index as a group were up +1.29% in April.

Meanwhile, the sub-group of ILS funds whose strategies include private ILS, so collateralized reinsurance and retrocession, still did very well and gained +0.99% in April.

For now the second month in a row, all of the ILS funds tracked by the Eurekahedge ILS Advisers Index reported positive returns for April 2023.

That is particularly notable, as it hasn’t been seen two months in a row for some time now, perhaps years, as the ILS fund market has dealt with loss creep and catastrophe losses through a period where margins were very low.

Those higher margins are now providing buffers that can allow ILS funds to profit better throughout the year, it now seems.

In April 2023, the ILS funds tracked by the this Index reported a range of performance from 0.28% to +1.78%.

It will be interesting to see if this strong ILS fund performance can continue, as when seasonal returns start to flow to reinsurance contracts during the hurricane season, the returns should be even higher.

ILS fund and cat bond fund performance returns Index

You can track the Eurekahedge ILS Advisers Index here on Artemis, including the USD hedged version of the index. It comprises an equally weighted index of 26 constituent insurance-linked investment funds which tracks their performance and is the first benchmark that allows a comparison between different insurance-linked securities fund managers in the ILS, reinsurance-linked and catastrophe bond investment space.

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