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Cat bonds outperform many private ILS portfolios: Frontier Advisors

Insurance-linked securities (ILS) portfolios with predominantly catastrophe bond holdings have on average outperformed many mid- and higher-risk ILS fund strategies that contain private ILS transactions over recent years, according to analysis from Frontier Advisors.

Catastrophe bonds typically provide reinsurance or retrocessional protection higher up in the risk tower, so are more risk-remote and so the cat bond market tends to only be significantly impacted by really major catastrophe loss events.

Given the catastrophe and severe weather loss environment since 2017, Frontier Advisors, an Australian independent investment consultant with an insurance-linked securities (ILS) specialism, believes that catastrophe bond funds have historically outperformed private ILS funds since 2017 and 2018.


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