Close this search box.

Collateral can be held too long for US wind ILW’s, study suggests

With the key January reinsurance renewals having been challenging and characterised by reduced capacity and higher pricing, the focus can often turn to buying hedges such as industry-loss warranties (ILW’s), but a new study highlights some issues investors should be aware of.

The study by Kriesch Advisors, mandated by Swiss-headquartered capital markets risk transfer focused fintech Cerchia, looks at the industry-loss warranty (ILW) product, by analysing PCS loss event data and finds that in some cases the collateral applied to an ILW contract may be held for longer than perhaps warranted.

After the main January renewals, the reinsurance and retrocession market typically has a focus on hedging or filling gaps in coverage.


Skip to content