May 2024 | As a structurally uncorrelated source of risk and return, we believe catastrophe bonds and insurance-linked securities (ILS) may permit investors to build more diversified and resilient portfolios. This could be particularly true now, as the rate on line (the ratio of premium paid to loss recoverable in a reinsurance contract) for private ILS formats and the cat bond market spread remain elevated and could provide attractive total yield potential. We believe the combination of continued elevated pricing, combined with the ongoing demand for reinsurance, may present an attractive investment opportunity throughout the remainder of 2024 and into 2025.
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