Leading The Way On ILS

Insurance-linked securities (ILS) are financial instruments issued by insurers and reinsurers to manage their exposure to low frequency but high severity losses.

ILS products, often seen in the form of catastrophe bonds (cat bonds), industry loss warranties and sidecars - which are financial structures established to allow investors to take on the risk and benefit from the return of specific books of insurance or reinsurance business - cover natural catastrophes such as hurricanes and earthquakes, life insurance, (including mortality and longevity) and man-made events such as fire and terrorism.

ILS returns are thus 'event' linked rather than correlated with risks associated with the wider financial markets as are found in traditional investment classes. Value is linked to the occurrence or non-occurrence of specific non-financial risks (e.g. Florida hurricanes). If there is no trigger event (i.e. no natural disaster before the maturity of the security,