Swiss Re Insurance-Linked Fund Management

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Investors response to Q3 cats shows ILS can be relied upon: Klugman, Swiss Re


The insurance-linked securities (ILS) investor base remained calm and orderly during the extremely active 2017 Atlantic hurricane season, and in fact, as hurricane Irma moved up the coast, Swiss Re’s Judith Klugman was surprised at just how willing investors were to provide additional capital.

The response and maturity of the ILS investor base after the impacts of large catastrophe losses in 2017 underlines the resiliency of the expanding sector, squashing previous re/insurance industry discussions about the permanence of ILS capital in the face of large losses.

This notion was discussed broadly by speakers and attendees during the 2018 Artemis ILS NYC conference, held recently in Manhattan.

Speaking with A.M. BestTV at the Artemis 2018 NYC ILS conference, held recently in New York City, Judith Klugman, co-head of ILS at Swiss Re Capital Markets, the ILS and catastrophe bond structuring division and investment banking unit of global reinsurer Swiss Re, highlighted just this.

“There was a very orderly market, not only was it orderly in terms of trading and liquidity, but in the fact that there was capital. Even after the events, some notable deals came to market,” said Klugman.

Ultimately, this shows the resiliency of the investor base, and Klugman stressed that the response and resiliency of investors shows that “this is an asset class that our clients and issuers can really rely upon.”

She continued to explain that during the events, hurricanes Harvey, Irma, and Maria, investors were remarkably calm and that trading still took place in an orderly fashion.

In fact, one thing that surprised Klugman was that leading up to hurricane Irma, the second of the big three 2017 Atlantic hurricanes to strike, many investors actually reached out to Swiss Re to inform them that they have the capital if it’s needed, and that if clients are looking for additional protection after the events, they were ready to provide it.

Underlining that the “capital markets can truly act as a real compliment to the traditional reinsurance market,” said Klugman.

“It is what I always believed, but I was surprised to see so many investors reaching out to us as the events were starting to unfold, when we saw Irma going up the coast,” she added.

Despite events in the third and fourth quarter of 2017 being descried as the ILS market’s first real test, the sector managed to replenish in time for the January 1st, 2018 renewals season. And while this might have limited any price hikes during 1/1, it supports the willingness and resiliency of both the ILS investor and sponsor base.

Klugman was just one of the industry leaders speaking at our Artemis 2018 NYC ILS conference on February 2nd 2018.

The full interview with Judith Klugman can be seen below:

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