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Finding ILS managers with proper capital reserving techniques crucial: Cambridge Associates

According to Joe Tolen, Investment Director in the Credit Investment Group at Cambridge Associates, one of the crucial elements of insurance-linked securities (ILS) manager selection is the ability to “identify managers with appropriate capital reserving techniques, necessary in the immediate aftermath of large catastrophic events.”

In a recent report for Cambridge Associates, Tolen wrote that the frequency and severity of catastrophic events between 2017 and 2022 have “inevitably led to side pocketing and trapped collateral issues throughout the industry.”

This has in turn made “capital less available for renewals, decreased ILS liquidity, and diminished expected returns,” he said.


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