Artemis Live - Insurance-linked securities (ILS), catastrophe bonds (cat bonds), reinsurance 62: ILS appetite for SRCC & political violence risk - Tom Johansmeyer, PCS, May 2021
May 12, 2021
27:01
For our latest Artemis Live interview we were joined by Tom Johansmeyer, Head of PCS, to discuss the insurance-linked securities (ILS) market's appetite to invest in strike, riot & civil commotion (SRCC) or political violence related risks.
The discussion came about because of a recent piece of work undertaken by Tom and his team, in which they polled the insurance-linked securities (ILS) market for its view on political violence as a class of business, including strike, riot and civil commotion (or SRCC) risks.
Tom and his team at PCS surveyed some 60% of the ILS fund market, by assets under management, equating to around 15 firms, to find out what ILS managers themselves think about SRCC or political violence risks and what it might take to make it a class of business they want to underwrite, as well as what if anything might stop them from doing so.
While ILS fund mandates can be very prescriptive and so include these kinds of risks in some cases, they aren't the main blocker. Instead it seems price and structure are the main issues blocking ILS funds from embracing these kinds of risks within their portfolios, as there just aren't the deals coming to market, at pricing that would be attractive, or structured in a way that complements on ILS investment strategy it seems.
But Johansmeyer believes there's a need for more capacity, to enable the insurance and reinsurance market for SRCC and other kinds of political violence to function better, with a role for ILS funds in providing some of that, likely on a retrocessional basis to begin.
The discussion came about because of a recent piece of work undertaken by Tom and his team, in which they polled the insurance-linked securities (ILS) market for its view on political violence as a class of business, including strike, riot and civil commotion (or SRCC) risks.
Tom and his team at PCS surveyed some 60% of the ILS fund market, by assets under management, equating to around 15 firms, to find out what ILS managers themselves think about SRCC or political violence risks and what it might take to make it a class of business they want to underwrite, as well as what if anything might stop them from doing so.
While ILS fund mandates can be very prescriptive and so include these kinds of risks in some cases, they aren't the main blocker. Instead it seems price and structure are the main issues blocking ILS funds from embracing these kinds of risks within their portfolios, as there just aren't the deals coming to market, at pricing that would be attractive, or structured in a way that complements on ILS investment strategy it seems.
But Johansmeyer believes there's a need for more capacity, to enable the insurance and reinsurance market for SRCC and other kinds of political violence to function better, with a role for ILS funds in providing some of that, likely on a retrocessional basis to begin.