June 23, 2021

ILS investors took advantage of diversification opportunities in Q1 2021

Catastrophe bond and related insurance-linked securities (ILS) issuance provided investors with both peril and regional diversification in the first-quarter of 2021, as shown by the Artemis Deal Directory.

In times of financial market volatility, such as the Covid-19 pandemic and the 2008 global financial crisis, the catastrophe bond asset class has proven its ability to provide investors with positive diversification characteristics.

But while the defensive asset class offers low-correlation and diversification from broader financial market turmoil, driven by the fact the exposures are largely related to natural catastrophe events, diversification is also evident within the asset class itself.

During the first-quarter of 2021, $4.7 billion of new risk capital came to market from 27 transactions comprised of 45 tranches of notes.

Of this, a significant 60%, or $2.8 billion offered…

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