Insurance-linked securities (ILS) is the “best asset class from a diversification perspective,” according to private bank and asset manager VP Bank AG, with the current level of compensation for taking on catastrophe risk still seen as more than adequate even as hurricane season begins.
Liechtenstein-based private bank and asset manager VP Bank believes that while the insurance-linked asset class (ILS), such as catastrophe bonds, lacks a typical distribution of returns given the randomness of catastrophic events and gains can be limited compared to equities, ILS as a portfolio component bring significant benefits through the diversification they offer to investors.
VP Bank has been recommending catastrophe bonds and ILS investments since 2022, when it saw the post-hurricane Ian market environment as an opportunity.
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