New asset classes for investors
For investors, ILS remain attractive. They offer high-risk adjusted returns relative to other fixed-income assets – while increasing portfolio diversification by adding risks uncorrelated to traditional asset classes. However, if alternative capital begins to cover perils that correlate with developments within the financial markets, appetite for ILS may lessen.
The 2017-2018 impact
IGLN participants suggested that major losses of these two years would dampen the alternative capital market. Despite the costly economic loss, the overall amount of capital in ILS funds increased. They noted that the importance of investor education in avoiding surprises such as unexpected economic losses from weather-related events.