Swiss Re Insurance-Linked Fund Management

Xactanalysis Insights and PCS

Trapped ILS capital news

What is trapped collateral, or trapped ILS capital? When an insurance-linked securities (ILS) contract is seen to be at-risk of facing losses, sometimes the cedent can call for the collateral (or capital backing the ILS deal) to be trapped or frozen, so it remains available while loss development continues.

The collateral is trapped and unavailable for reinvesting into new ILS contracts, which can create a drag on ILS investment portfolios. The ILS capital can remain trapped for months or years until the ultimate loss associated with the contract is clear and a payout is deemed due or otherwise.

 

Share

Rate increases no longer a panacea for ILS fund results: AM Best

14th March 2022

Rate increases alone are no longer considered sufficient to improve the underwriting results of insurance-linked securities managers and reinsurance firms, according to AM Best, who believes that after consecutive years of heavy catastrophe losses the only answer is continued improvement of the quality of portfolios of risk.

Read the full article