Artemis Live - Insurance-linked securities (ILS), catastrophe bonds (cat bonds), reinsurance 9: Cory Anger, GC Securities, May 2020 - on catastrophe bonds, ILS & reinsurance during Covid-19
May 27, 2020
28:14
Cory Anger, Managing Director of GC Securities, the capital markets and insurance-linked securities (ILS) unit of reinsurance broker Guy Carpenter, joined us to discuss the state of the catastrophe bond and ILS market, under the lens of the Covid-19 pandemic.
Anger noted the strong start to the year for catastrophe bond issuance in 2020 and said that despite the initial hit caused by the pandemic, issuance is expected to remain robust.
The catastrophe bond continues to offer the protection many cedents are seeking, while enabling them to diversify their reinsurance and retrocessional capital sources, Anger said and also noted the investor case as well.
"One of the things I'm most proud of is that this marketplace again has reaffirmed that it does perform differently to the broader capital markets," Anger explained.
Highlighting the performance of ILS versus other asset classes and how ILS exhibited positive features under the pandemic-hit market conditions, Anger said, "We had a more muted reaction, as represented through the cat bond index, to the valuation of this product. But if you look at more traditional asset classes, if you looked at the same time period for the S&P 500, they were down almost 23%.
"When you also look at the correlation of ILS, represented by cat bonds, you can see a substantially lower correlation pattern between ILS and the other asset classes."
Anger went on to discuss what this means for investment allocations to ILS and reinsurance going forwards.
Anger noted the strong start to the year for catastrophe bond issuance in 2020 and said that despite the initial hit caused by the pandemic, issuance is expected to remain robust.
The catastrophe bond continues to offer the protection many cedents are seeking, while enabling them to diversify their reinsurance and retrocessional capital sources, Anger said and also noted the investor case as well.
"One of the things I'm most proud of is that this marketplace again has reaffirmed that it does perform differently to the broader capital markets," Anger explained.
Highlighting the performance of ILS versus other asset classes and how ILS exhibited positive features under the pandemic-hit market conditions, Anger said, "We had a more muted reaction, as represented through the cat bond index, to the valuation of this product. But if you look at more traditional asset classes, if you looked at the same time period for the S&P 500, they were down almost 23%.
"When you also look at the correlation of ILS, represented by cat bonds, you can see a substantially lower correlation pattern between ILS and the other asset classes."
Anger went on to discuss what this means for investment allocations to ILS and reinsurance going forwards.