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ILS fund return potential rising with reinsurance rates: Frontier Advisors

The forward-looking return potential of many insurance-linked securities (ILS) fund portfolios continued to rise over the last year and it’s likely this has accelerated through January 2022, as price rises in reinsurance and retrocession boost no-loss and expected return metrics.

Recent analysis undertaken by Frontier Advisors, an Australian independent investment consultant with an insurance-linked securities (ILS) specialism, shows that over the year to July 2021, the return potential of many ILS funds rose, with the higher risk ILS fund strategies rising fastest.

“Higher risk portfolios have experienced a greater increase in expected and mean returns as no loss returns in higher risk layers and structures has increased more significantly year on year. This is the result of several years of losses within these contracts,” Frontier Advisors explained.


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