Greg Wojciechowski, chief executive of the Bermuda Stock Exchange, is bullish about the state of the ILS market in 2019—and believes Bermuda remains the natural location for this asset class to continue to evolve and develop.
Speaking to Monte Carlo Today, he said the state of the ILS market had changed substantially in the decade that he’d been coming to the Monte Carlo Rendez-Vous, and that insurance-linked securities (ILS) was no longer seen as an unwelcome participant in the insurance market.
Wojciechowski pointed out that ILS rose to prominence as an asset class partly on the back of the financial depression that gripped the markets in 2008, as investors looked around for something that promised returns.
“There are not many asset classes that develop with the attributes that ILS has for investors,” he said.
“Ten years ago, ILS was an unwanted visitor. People were asking ‘is the capital sticky, is it really good for the market?’.
“The market has been tested several times, probably most aggressively over the past couple of years. Some no longer call it alternative capital, but rather partnership capital, to the extent that traditional models have really blended.”
Wojciechowski said he did not think investors were wary of ILS products after natural disasters in recent years. Instead, investors are now better educated about the way that ILS works and understand the usage, opportunities and limitations of these financial tools far better.
As a result, while some claim that investors have slowed investing in the ILS market, there were other indications that interest is still there and still strong.
“When you look around the world at some of the global economic developments, the financial markets are lacklustre,” he said.
“You’re seeing things such as inverted yield curves and negative interest rates. Even though ILS has some structural issues that I think are going to be worked through, there is still a yield out there in an ILS asset.
“I’m bullish about Bermuda and its place in the ILS market, as it can benefit from its combination of entrepreneurship in ILS but also its prudence.”
This story was originally published on our sister publication, Intelligent Insurer.
Monte Carlo 2019, BSX, Bermuda Stock Exchange, Insurance, ILS, Greg Wojciechowski, Bermuda