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,