Catastrophe bond investments are currently offering investors a superior total return, diversification versus other asset classes and currently a lower risk profile than had been seen in recent years, Fitch Ratings has noted.
The rating agency believes that record issuance of insurance-linked securities (ILS) is set to continue, as insurance and reinsurance firms tap the capital markets to use catastrophe bonds as a way to manage risks amid a firm reinsurance market.
Key to re/insurer use of the cat bond market is a desire to “backfill unmet property risk needs and diversify counterparty exposure,” Fitch believes.
The rating agency highlights that cat bond issuance is on record pace in 2024 and suggests an annual record will be achieved this year.
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