ILS continues growth outside property cat market, says ILS Capital Management

The insurance-linked securities (ILS) market is expected to continue to expand beyond the property cat market and leverage ongoing growth in primary insurance, according to John Haggerty, partner and managing director at ILS Capital Management.

Explaining his view to Baden-Baden Today, Haggerty said that his team will “continue to focus on sourcing attractive risk-adjusted opportunities outside the property cat market”.

“We will look to develop our primary insurance operations and thoughtfully grow this business into other areas of the market,” he added.

The company’s key focus is underwriting the specialty reinsurance portfolio, of which the majority (95 percent) is marine and offshore energy. Haggerty said he was “very pleased with how the business is growing” as well as the efforts the company has made in repositioning its book to better suit investor appetites.

To build on this, Haggerty said, the company needs to continue what it is doing and finding attractive risk-adjusted risks in the specialty market.

“From an investor’s point of view, we need to continue to find new ways of managing trapped collateral, starting at a risk level through incentive for timely release or being paid when the collateral is trapped.

“We need to look at more creative financial instruments to take advantage of and leverage existing collateral.

“From our clients’ perspective, we need to keep coming up with new ways to make our product more appealing to their needs. We need to keep marketing our products and allay fears that we are a short-term market,” he said.

He explained that clients need to know they can rely on ILS Capital as a continuous partner. “Since 2015, we have never been in a position where have not been able to offer renewal terms due to collateral restraints. Many of our existing clients initially brought our product to fit around their traditional reinsurance programmes,” he explained.

“Some of the growth we have seen in our account is through larger lines or additional purchases. Over time our clients’ perception of us is changing; through our continued support, we are more readily seen as core to their reinsurance needs as opposed to ancillary. This is what we must continue to build on.”

Haggerty added that the industry was “ripe for technological disruption”.
“It is necessary to continue to grow the market and give alternative capital providers the transparency investors require.

“The most meaningful technology changes will accomplish these goals, particularly when assessing losses, providing timely information and ultimately greater transparency.”