Insurance-linked securities expand the horizon for impact investing: Smith, Sage Advisory

Speaking yesterday at the ILS Bermuda Convergence 2026 conference, Bob Smith, President & Co-CIO of fixed income and alternative solutions manager Sage Advisory, explained that he sees insurance-linked securities as an asset class that can expand the horizon of impact investing.

Smith is a strong proponent for investing into catastrophe bonds and other natural catastrophe linked insurance-linked securities, seeing them as particularly valuable diversifiers that over the long-term have also outperformed many other fixed income asset classes.

But, as well as the low-correlation and differentiated return features that cat bonds and ILS can bring to investors portfolios, Smith also believes strongly in the sustainable investment qualities of the asset class.

“In this environment, one of the things that we always look for, because we are in many ways a sustainably focused investor as well at our firm, and we believe in responsible investing. So we’re always looking for investments that have impact and if there’s anything I can tell you at this conference, is indeed cat ILS is an impact investment,” Smith explained.

“It has economic purpose. There’s a lot of stuff in the asset backed world where I’m not really sure I get the economic purpose, other than what the management wants. Is it really good for the broader economy and society?”

Smith went on to say, “When we look at investments, we want to also be socially engaged. I think that ILS, quite frankly, needs to be front and centre in most impact portfolios.

“It’s an area that’s completely missed in terms of investors, and the problem with most impact investing is that it’s all about mitigation. But when we talk about this area, cat ILS, we’re talking about investing in resiliency, and resiliency is the number one byproduct of the effort in ILS.

“Yes, there is economic purpose, but we’re really about adaptation not mitigation. We’re about economic stability, and lastly, social risk. We want to make sure society continues on, and that there is not unrest.

“So, through the mechanism and the risk transfer mechanism offered by ILS, I think you expand the horizon for impact investing, and I think that is where the focus needs to be, because there’s a lot of money out there looking for this product, looking for this area of the market to invest in.”

You can read more of the firm’s thoughts on the impact topic in this article: ILS & cat bonds show impact investing can move beyond mitigation into resilience: Sage Advisory.