ILS investors fuel collateralised reinsurance growth

Money is pouring into insurance-linked securities as investors look for non-correlated returns, with collateralised reinsurance investments becoming an increasingly popular vehicle for both investors and sponsors. Yet the lack of standardisation and liquidity of such instruments is seen as a potential drag on the growth of this sector. Louie Woodall reports on how the market is taking steps to devise new structures that can overcome these drawbacks


Institutional investment in insurance risk has become mainstream. Insurance-linked securities (ILS) made their first appearance less than 20 years ago, but by the end of 2012 the market for catastrophe bonds, industry loss warranties and collateralised reinsurance had soared to $28 billion (£18 billion).

Burgeoning investor appetite is primarily responsible for these instruments’ popularity. During the past few months, large money managers have made sizeable investments in ILS funds. In April

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