correlation

Investors around the world continue to fear a return of the stocks and bonds volatility seen in 2022 and as a result diversifying and uncorrelated assets are increasingly being sought out, which is positive for the insurance-linked securities (ILS) asset class.

There’s a new strategic asset class in town, the Crisis Risk Offset (CRO), a select group of assets that could provide returns and liquidity during an economic growth crisis, and one of the assets considered able to offset a crisis for investors is ILS and reinsurance.

Institutional investors are set to increase their allocations to investment strategies which fall into the ‘liquid alternatives’ classification, which typically means a UCITS or 40 Act strategy investment fund, neatly fitting the mold of some catastrophe bond and ILS funds.

Managers of large multi-asset class investment funds are showing signs of concern that correlation levels between asset classes may break down, with their portfolio adjustments suggesting a shift towards assets that can protect investments.

Lane Financial LLC, a consulting firm and broker-dealer focused on the insurance-linked security, catastrophe bond and associated sectors or reinsurance, published their latest quarterly ILS market report yesterday. As always, the report contains a deep statistical view of the outstanding ILS and cat bond market using their own proprietary Lane Financial Insurance Return Index which […]

We like to bring you interesting data points about the catastrophe bond and insurance-linked security market here on Artemis. Today we have a really interesting chart showing the correlation of ILS returns with the S&P500 from the latest quarterly ILS market report published yesterday by Lane Financial LLC, a consulting firm and broker-dealer focused on […]

Correlation is a word that often crops up in articles here on Artemis and within the financial services industry as a whole. Correlation can be better understood as an interdependence, mutual relationship or connection between two or more things. In the risk and reinsurance markets we cover, we use the term correlation to describe how […]

More positive news in the global financial press today for catastrophe bonds as Bloomberg (here on the SF Gate website) discusses the returns the market has offered since the earthquake in Japan struck and dented the markets confidence. They compare the returns of an index of cat bonds with the returns of other assets and […]

The correlation of insurance-linked securities to other asset classes and the financial markets in general is always a topic of much discussion among investors and market participants alike. Ever since the collapse of Lehman Brothers and the resulting fallout on a number of catastrophe bonds which used a Lehman subsidiary as swap counterparty, the market […]

2009 has been the year that catastrophe bonds evolved to avoid the credit risk issues of the past caused by reliance on a total return swap counterparty for collateral. After the credit crisis proved that all financial instruments have some degree of correlation to the wider financial markets transactions completed this year have all taken […]