ILS are securities issued by an insurance or reinsurance company or other insurance risk aggregator and purchased by capital market investors. As a result, insurance risks of various types - for example, mortality, longevity, certain property classes or catastrophe – can be transferred from the issuer to the owner of the security.
The process of issuing such securities is commonly referred to as insurance securitisation.
By owning an ILS, the Master Fund will own the right to future cash flows. The expected returns from these securities will mainly depend on the occurrence and severity of insurance events, as well as, to some extent, general capital market movements
|