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Niklaus Hilti, Chief Executive Officer and Chief Investment Officer of Credit Suisse Insurance Linked Strategies, gave an interview to Artemis1 about the current state of the insurance-linked securities (ILS) investment space and reinsurance market trends.
July 7, 2020
Hilti began by explaining that his team started closely monitoring the impact of the COVID-19 pandemic on ILS when alerted to it in January.
Getting more specific, Hilti detailed his team’s work on reviewing liquidity, as well as exploring opportunities to de-risk and establish hedges for both life and non-life.
Expressing hope that there will be limited loss of notional if the pandemic stays contained, he advised caution: “It’s far too early to say that this is over.”
Hilti further explained that, on the non-life side, the flight to liquidity recalled the events of 2008. He stressed that while the ILS segment has overall been somewhat less impacted than insurance and reinsurance, potential turbulence for the market as a whole may still lie ahead.
Regarding the outlook for ILS, Hilti stated that he expects “strong demand and very attractive returns going forward.” He also added that this pandemic will likely not only lead to a rethinking of the probability and extent of pandemic risks, but also that risk managers will start to look differently at certain peak risks and it’s correlation under such severe scenarios. Both can lead to great opportunities in both the life as well as non-life ILS markets in the near future.
The January 1 renewal cycle is important for investor returns as more than half of all reinsurance contracts are renewed in this time frame.
1 Online since 1999, Artemis provides news, analysis, and data on catastrophe bonds, insurance-linked securities, and alternative reinsurance capital. Today, Artemis is the longest running news, analysis, and data media service devoted to this space with 55,000+ readers and 280,000+ page views per month.