The average return of the insurance-linked securities (ILS) fund market was just 0.13% in January 2021, as pure disaster bond funds exceeded those purchased private ILS, according to the Eurekahedge ILS Advisers Index.Pure feline bond funds returned 0.29% as a group in January, which was an affordable start to the year for these strategies.
However the group of ILS funds that purchase private ILS contracts and collateralised reinsurance was just up by 0.02% in January, as a variety of funds reported unfavorable performance.
We understand some modifications to reserves and side pockets for prior period loss events, including reserves made versus prospective COVID-19 service disturbance loss effects were a chauffeur, as too were brand-new estimations of recent natural catastrophe events.
These contributed to some collateralised reinsurance focused ILS managers beginning the year off on a negative footing.
In overall, 24 of the ILS funds tracked by the Eurekahedge ILS Advisers Index reported positive returns for the month of January 2021.
However, 6 ILS funds were negative, with these the ones facing re-estimations of prior duration losses, we comprehend.
Nevertheless, while some ILS funds dealt with negative efficiency to start the year, overall the variety of efficiency across the ILS funds tracked was tight, spreading from -1.5% to +0.7% for the month.
You can track the Eurekahedge ILS Advisers Index here on Artemis, including the USD hedged variation of the index. It comprises a similarly weighted index of 32 constituent insurance-linked mutual fund which tracks their efficiency and is the first benchmark that allows a contrast in between various insurance-linked securities fund managers in the ILS, reinsurance-linked and disaster bond investment space.