Elevated, near-record returns and still-evident asset class diversification benefits, leave insurance-linked securities (ILS) and alternative capital in reinsurance poised for strong growth, according to Aon’s Reinsurance Solutions.
A supply-demand imbalance that became evident in the catastrophe bond market in 2022, alongside the reaction to increased catastrophe activity over the last five years, has “pushed the bond market into a higher total return environment, with material increases in overall pricing, accompanied by higher collateral returns,” Aon explains.
Adding, “We anticipate Insurance-Linked Securities (ILS) investors to take advantage of attractive returns and diversification opportunities presented by the ILS market in 2023, driving further growth and delivering valuable capacity for re/insurers.”
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