Prospectus 2021

As the insurance-linked securities (ILS) market looks towards year-end and into the new year, investors are showing appetite for structures and strategies from across the ILS and broader insurance and reinsurance universe, according to Stephan Ruoff, Head of Schroder Secquaero.

Within both the market and contracts the exclusion of communicable diseases is unsurprisingly a key focus, but there are other, similarly difficult to predict losses that companies should be examining, according to industry experts.

The World Bank’s 2017 pandemic catastrophe bond has provided a blueprint for how insurance-linked securities (ILS) technology can be leveraged to transfer pandemic risk, according to Joanna Syroka, Director of New Markets, Fermat Capital Management, LLC.

The insurance-linked securities (ILS) market is currently experiencing somewhat of a flight to simplicity, and with technology led risk transfer solutions set to drive greater standardisation, it’s expected that the capital markets will be able to participate more readily as a result.

With just weeks left until the end of the year, it remains to be seen exactly how much private equity (PE) is raised and what impact this will have at the upcoming renewals, but the current environment suggests we might see some decoupling between traditional reinsurance and insurance-linked securities (ILS) structures.

As vendor catastrophe models and elevated annual losses show that secondary perils have grown in prevalence for the re/insurance and insurance-linked securities (ILS) markets, climate risk needs to be explicitly baked in, according to Kelly Hereid, Director, Catastrophe Research & Development, Liberty Mutual Insurance.

The implications of the ongoing Covid-19 pandemic on the re/insurance market suggests that the availability of capital is going to be a major issue, according to Tom Johansmeyer, Head of PCS.

The response of the catastrophe bond market to Covid-19 has demonstrated the sector’s resilience to a global pandemic, but as investor appetite intensifies, price increases could suffer, according to Stephan Ruoff, Head of Schroder Secquaero.

With the important January 1st, 2021 reinsurance renewals fast approaching, priorities for the insurance-linked securities (ILS) market for year-end are expected to include named perils and ensuring alignment amid a hardening environment, according to Michael Millette, Founder & Managing Partner, Hudson Structured Capital Management.

While challenges around capital consumption and the potential for overlap on the P&C side are clear, for investors, the insurance-linked securities (ILS) asset class represents a great opportunity to complement other private market solutions, according to industry experts.