ILS Emerges As An Alternative Asset Class

Fiona Le Poidevin, Chief Executive of Guernsey Finance, explores how Guernsey's investment and insurance expertise mean it is capitalising on the opportunities presented by the growth of Insurance Linked Securities (ILS).

Insurance Linked Securities (ILS) are growing in popularity among investors as an alternative asset class and with insurers as a means of accessing greater quantities of affordable risk transfer capacity. ILS permit an insurer to purchase additional protection for low frequency, high severity losses, including natural and non-natural perils, operating in the traditional insurance market, typically in the form of catastrophe 'cat' bonds or collateralised reinsurance. Investors are increasingly attracted to ILS because returns are non-correlated with the general financial markets.