Artemis Live - Insurance-linked securities (ILS), catastrophe bonds (cat bonds), reinsurance 26: Sidney Rostan, SCOR Investment Partners, October 2020 - on industry loss warranties & ILS trends
Oct 19, 2020
37:37
Sidney Rostan, Head of ILS at SCOR Investment Partners is the latest industry executive to join our series of Artemis Live video interviews.
Leading insurance-linked securities (ILS) investments for the asset management group of global reinsurance company SCOR, Rostan shared his views on a specific topic of interest, the opportunity in industry-loss warranty (ILW) investments, as well as on ILS market trends in general.
Rostan explained that the industry-loss warranty (ILW) market is more than just a fall-back for retrocession, or an alternative to a catastrophe bond.
"We've been able to build relationships in that market," he explained.
"We've seen the landscape change, in terms of who's buying and who's selling protection, we've seen people come in and come out. But at the same time we do have long-standing relationships with a number of counterparties," he continued.
Adding that, "We're renewing some ILW structures for the fifth or the sixth time," with customised solutions and tailor-made ILW coverage a focus.
"An ILW is basically the only product which is not syndicated. It is the only product which allows you to generate your own investment opportunity, in a way, unlike cat bonds or the vast majority of CRI.
"You can build your own structure. You can imagine that you have an existing portfolio and you want to design the perfect additional investment, really fitting your portfolio, enhancing the diversification and the risk -adjusted return, for example.
"So you can design that structure and try to place it, try to find the exact matching interest," Rostan said.
While that's theoretical and often, in practice, it is not always so easy to find the exact matching appetite, you usually end up with the structure you're looking for or a structured that is very similar and that makes sense from a portfolio construction perspective, he explained.
More broadly, Rostan discussed ILS market conditions and his outlook. He said to expect "an overall market hardening, more investor discipline in the visible part of the market, and a pretty good environment for us."
While there is still a lot of uncertainty in the market over COVID-19 and the potential for losses from the pandemic, while legal actions continue to evolve, Rostan said the ILS market will take its share of the loss, with more impact on the UNL side and in the retro market.
Leading insurance-linked securities (ILS) investments for the asset management group of global reinsurance company SCOR, Rostan shared his views on a specific topic of interest, the opportunity in industry-loss warranty (ILW) investments, as well as on ILS market trends in general.
Rostan explained that the industry-loss warranty (ILW) market is more than just a fall-back for retrocession, or an alternative to a catastrophe bond.
"We've been able to build relationships in that market," he explained.
"We've seen the landscape change, in terms of who's buying and who's selling protection, we've seen people come in and come out. But at the same time we do have long-standing relationships with a number of counterparties," he continued.
Adding that, "We're renewing some ILW structures for the fifth or the sixth time," with customised solutions and tailor-made ILW coverage a focus.
"An ILW is basically the only product which is not syndicated. It is the only product which allows you to generate your own investment opportunity, in a way, unlike cat bonds or the vast majority of CRI.
"You can build your own structure. You can imagine that you have an existing portfolio and you want to design the perfect additional investment, really fitting your portfolio, enhancing the diversification and the risk -adjusted return, for example.
"So you can design that structure and try to place it, try to find the exact matching interest," Rostan said.
While that's theoretical and often, in practice, it is not always so easy to find the exact matching appetite, you usually end up with the structure you're looking for or a structured that is very similar and that makes sense from a portfolio construction perspective, he explained.
More broadly, Rostan discussed ILS market conditions and his outlook. He said to expect "an overall market hardening, more investor discipline in the visible part of the market, and a pretty good environment for us."
While there is still a lot of uncertainty in the market over COVID-19 and the potential for losses from the pandemic, while legal actions continue to evolve, Rostan said the ILS market will take its share of the loss, with more impact on the UNL side and in the retro market.