diversification

A report from rating agency Standard & Poor’s highlight the benefits diversification can bring to a reinsurance or insurance business model, but only so long as the company is diversifying for the right reasons, which raises questions given the current soft and challenging market.

Diversification, how important is it and what options does the ILS market offer? This roundtable, titled ‘Achieving optimum diversification: understanding liquidity, volatility and performance risks for uncorrelated yield’, discusses these questions and more.

The insurance-linked securities (ILS) market, of catastrophe bonds and fully-collateralized alternative reinsurance capital structures, faces a battle for access to diversifying perils as traditional reinsurers look set to compete strongly for this segment of the market.

The insurance-linked securities and catastrophe bond market covers a broad universe of risk considering its size of near $15 billion. Having begun with a focus on natural perils, with the first transactions coming to market in 1996/7, the ability to securitize risks and sell the resulting notes to investors, there by effectively transferring the risk […]

We’re starting to hear rumblings from a number of insurance-linked securities (ILS) and catastrophe bond investors that the high volume of cat bonds brought to market this year is beginning to have an impact on ILS funds and investors ability to diversify their portfolios. The speed with which new deals have appeared and the appetite […]

It’s interesting to take a closer look at the mix of perils that make up the catastrophe bond market and to compare the way that mix changes over time. In recent years the dominance of the cat bond market by U.S. hurricane risks has been a defining feature and that likely won’t change as the […]

The mix of perils and the underlying structure of some recent catastrophe bond transactions point to a gradual expansion of the cat bond markets scope and offer investors new sources of diversification. The inclusion of new perils within some cat bonds while other deals focus on a specific peril and geographic location, along with new […]

As much as 68% of the outstanding non-life insurance linked securities and catastrophe bond market was exposed to U.S. hurricane risks at the end of 2011 according to the fourth quarter ILS market update from Willis Capital Markets & Advisory. And so continues the trend for the cat bond market to be U.S. wind top-heavy, […]

Diversity and the hunt for diversification are key topics which regularly come up in our articles, our discussions with participants in the market and our coverage of deals and transactions in the catastrophe bond and insurance-linked securities spaces. Diversity is a factor which enables the market to grow, encourages investors to enter the market, makes […]

The insurance-linked securities market saw steady issuance during 2011 and still managed to achieve near $5 billion of new issuance despite the disruptions to the market caused by new risk models and large catastrophe events, says Towers Watson in their January report on the P&C re/insurance market (available here). Sponsors of ILS and catastrophe bond […]