While public and private insurance-linked securities (ILS) offer distinct pathways to insurance risk premia, the choice between them involves more than just a calculation of risk and return. According to Mark Gibson, Senior Investment Director at Schroders Capital, the true dividing line for investors is the degree of liquidity and transparency they are willing to trade for enhanced spreads and bespoke underwriting access.
In a new report, Gibson highlights that while ILS has become a staple for those seeking low correlation and attractive yields, maximizing the asset class requires a strategic balance.
By blending public cat bonds with private ILS, investors can moderate the structural trade-offs of each, pairing the liquidity of the bond market with the higher-yielding, customised potential of private contracts to suit their specific governance capacity and time horizons.
FULL ORIGINAL PUBLICATION HERE