What institutional investors want

The data shows that institutional investors remain attracted to insurance-linked funds. Investors are looking for modest returns, larger allocations and better ways to educate their stakeholders about insurance-linked securities.

Clear Path Analysis spoke to 108 institutional asset managers and owners in Europe and the United States about what they look for in the asset class. 28.7% said that they were looking to increase their exposure to natural catastrophe risk over the next twelve months versus 18.5% who said that they were looking to decrease exposure. The full report covers a variety of topics and contains interviews with some key decision makers. It can be downloaded here.

Returns

Allocation

Selection

When asked to identify the main characteristics of an alternative investment manager that they seek out 'track record' was the clear winner amongst institutional investors. 'Top quartile returns' was the second most important characteristic. This may be a frustrating result for those who believe that historical returns are a poor indicator of future returns for funds in general and ILS funds in particular.

Challenges

The most significant challenge faced by institutional asset managers was identified as 'educating and getting trustees/stakeholders comfortable'. Fortunately, InsuranceLinked has just updated its guide to the asset class.

Hedging Hurricanes - a concise guide to reinsurance, catastrophe bonds and insurance linked funds is now available in print and on Kindle.


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Click here for the US edition $5.95

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Click here for the UK edition £3.95

Posted: Monday, February 13th, 2017