With the insurance-linked securities (ILS) sector continuing to expand, institutional investor appetite within the space has been resurgent. A new paper from consultancy firm bfinance acknowledges that manager selection within the market involves distinct challenges, with unique investment risks and notable operational complexity to consider.
Recent demand for ILS strategies has been particularly strong. While pricing has begun to soften, with rate-on-line levels coming off their historic highs, returns are still elevated when compared towards the pre-2020 period.
“Higher-for-longer interest rates have supported attractive yields, while the sector demonstrated its ability to provide diversification versus traditional asset classes thanks to its dissociation from macroeconomic variables,” bfinance explains in its paper.
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