As the casualty insurance-linked securities (ILS) market continues to expand, rating agency AM Best has indicated that market participants will need to remain focused on ensuring that both underwriting discipline and risk transparency develop simultaneously in order to keep pace with investor demand.
While innovation in the capital markets can offer significant sources of capacity, AM Best has pointed out that some reinsurers have raised concerns about the speed and framework of specific casualty insurance-linked securities initiatives.
In a recent report, AM Best notes that casualty ILS remains a relatively small portion of the overall alternative capital market.
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