Despite catastrophe bond risk spreads having tightened and reinsurance rates being expected to decline at the renewals, specialist insurance-linked securities manager Twelve Securis says the relative value of the ILS asset class remains compelling for investors with structural improvements set to persist.
The trend of spread tightening in the catastrophe bond market has been reinforced by strong demand for the asset class, as well as the lack of losses faced, the investment manager explained in a new thought-leadership piece.
This spread environment, driven by seasonal and structural factors, has served to make the cost of risk capital and reinsurance protection cheaper for cat bond sponsors, which has been helping to drive the significant issuance levels seen this year.
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