Key Features Of ILS Funds In Bermuda

Bermuda is a significant player in the reinsurance market and its position in this market has led to the growth of the use of funds as the funding vehicles for many reinsurance companies. The use of funds in this space is a result of the demand for such products by major institutional investors wishing to invest into the reinsurance sector but via a fund structure with which they were familiar. These funds may also invest in other forms of insurance-linked securities (ILS) including catastrophe bonds. The convergence of funds and reinsurance has led to a hybrid fund, namely ILS funds.

ILS Funds – What Are They?

ILS funds are basically funds that invest in ILS or, in other words, funds that invest in financial instruments and securities whose value are affected by insurance loss events including catastrophe bonds and shares in an underlying reinsurance company. As the value of these securities are linked to risks or events that are non-financial (such as natural