Solutions and Capabilities Insurance Linked Strategies

Insurance Linked Strategies

Credit Suisse’s Insurance Linked Strategies team (CSILS) has one of the longest track records in insurance-linked strategies (ILS). Since its inception in 2003, the team has firmly established itself as one of the leading ILS managers globally. 

Today, CSILS’s investment team and broader market access platform1 contains more than 35 specialized investment and reinsurance professionals2 and is backed by a large team of experienced professionals fully dedicated to CSILS. The team currently manages about USD 6 billion3 in assets and is among the largest providers of capital for property catastrophe reinsurance in the world. 

The asset class

ILS is an innovative niche asset class allowing investors to gain exposure to reinsurance catastrophe risks and earn returns largely uncorrelated to traditional and alternative asset classes. 

ILS strategies access insurance risks, covering for prespecified catastrophe events, such as but not limited to, natural catastrophes (e.g. hurricanes, earthquakes, windstorms, floods, wildfires and other natural disasters) but also man-made catastrophes and specialty lines of business (e.g. agriculture, engineering, marine, aviation and others) and receive premiums in return.

Consequently, the performance of ILS strategies is contingent on the occurrence or non-occurrence of specific insurance events. Such events are typically characterized by the frequency (how often events happens) and severity (how costly the event is when it happens). As a result, ILS investments can deliver attractive, stable returns in the absence of large insurance catastrophe events.

ILS strategies typically invest in one or more insurance-linked instruments, including but not limited to securities (e.g. Cat Bonds), private reinsurance transactions with insurance and reinsurance companies (ILS Private Transactions) or portfolios of reinsurance contracts (e.g. Quota Shares).

Insurance-linked strategies can offer investors:

  • Low correlation to traditional and alternative asset classes
  • Attractive return potential on a risk-adjusted basis
  • Floating returns with a fixed premium above the variable money market yield

ILS Introduction Video

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Note: Investments in insurance-linked strategies are speculative and can lead to a substantial loss due to severe insurance catastrophe events or other events (e.g. unusual clustering of independent catastrophe events).