Analysis

California has suffered another record-breaking wildfire season but the impact on the ILS market is likely to be marginal, sources have said.

Almost 30 percent of the ILS funds tracked by the Eurekahedge ILS Advisers index recorded losses in the first half of 2018, with an average loss among this group of 2.82 percent, the index providers told Trading Risk.

A growing focus on climate change, as well as the increasing breadth of the ILS market, means that investors are considering the argument for ILS as an ESG investment, as well as a diversifier.

Covea’s reinsurance buying team say they value the face-to-face relationship with cat bond investors.

Of the listed Florida-based insurers, Federated National and Heritage recorded the greatest increases on their Hurricane Irma losses by the second quarter reporting period.

Cat bond spreads proved to be largely unaffected by last year’s catastrophe activity as sponsors topped up ILS cover in a busy second quarter that nonetheless failed to outstrip 2017’s record volumes.

State-backed insurer Florida Citizens has borne the brunt of Irma losses, as other leading carriers in the state managed to keep their share of the event’s claims below their market share, Trading Risk analysis shows.

The average second quarter returns for a group of ILS funds tracked by Trading Risk has increased to 1.36 percent, compared with 0.79 percent for the same quarter last year.