Insurance-linked investments

For the month of August 2024, the broad benchmark index for insurance-linked securities (ILS) funds, the Eurekahedge ILS Advisers Index, has recorded its highest monthly return since its inception in 2006, being up by 1.71% for the month.

The catastrophe bond and insurance-linked securities (ILS) market has a “meaningful growth opportunity” ahead of it, with a near doubling of the ILS market to as much as $200 billion in capital possible by the year 2032, according to analysts at investment bank Jefferies.

Essent Guaranty, a wholly owned subsidiary of Essent Group, has successfully closed Radnor Re 2024-1 Ltd., the firm’s tenth issuance of mortgage insurance-linked notes, which upsized and eventually completed at $363.4 million.

Wealth managers at US Bank, the fifth-largest commercial bank in the United States, have highlighted reinsurance and insurance-linked securities (ILS) as diversifying drivers of income for their clients.

After posting record levels of issuance so far in 2024, the catastrophe bond market appears poised to offer an attractive entry point for investors, according to Jack Burdick, an Associate at investment manager Neuberger Berman.

Ledger Investing, the insurtech and casualty insurance-linked securities (ILS) company, has funded and launched a new $100 million casualty sidecar for a global reinsurer, financing the company’s casualty reinsurance business over three underwriting years on a quota share basis.

Interest in private ILS opportunities, so collateralised reinsurance and retrocession arrangements, has been rising and continues to, Marcel Grandi of Twelve Capital believes. He also thinks these instruments afford an investment manager more scope, in terms of investment options beyond catastrophe bonds and tailoring portfolios.

Insurance-linked securities (ILS) such as catastrophe bonds are seen as a versatile and adaptable diversifying strategy that can can provide investors strong, reliable return potential, particularly on a risk-adjusted basis, the Liquid Diversifiers team at WTW has said.

For traditional reinsurers, scale and the ability to provide a broad and comprehensive offering has become more critical and with little interest in starting new companies in the space, the global reinsurance industry is consolidating organically, rating agency AM Best believes.

The total-return of the outstanding catastrophe bond market for 2024 through the end of August has now hit double-digits at 10.07%, according to data from the Swiss Re Cat Bond Performance Indices, which means while cat bond market performance is running behind the prior year, returns remain historically elevated.