Insurance
Home›Insurance›Reinsurance›UBS plans to marginally increase catastrophe bond allo…
UBS plans to marginally increase catastrophe bond allocations
UBS cut its hedge fund team’s reinsurance and ILS weighting to a 1% forward target at the start of 2026, while keeping that level through the third quarter.
UBS Asset Management is looking to marginally raise allocations to catastrophe bonds, arguing the ILS segment remains attractive on a relative basis because of the carry it can generate compared with other parts of credit and fixed income, according to Artemis.
Artemis reports UBS Asset Management’s Unified Global Alternatives team has been active in adjusting client and strategy portfolios, including allocations to reinsurance via catastrophe bonds and other insurance linked securities to pursue returns that are relatively uncorrelated with other investments.
The UBS hedge fund team previously put reinsurance and ILS at a 3% portfolio weighting in 2024 and 2025, but it pared that back to a 1% forward looking target weight at the beginning of 2026. That 1% target for reinsurance, cat bonds and ILS remains in place for the third quarter of the year, Artemis said.
Artemis adds that UBS sees catastrophe bond pricing as having normalized toward more average historical levels, and it views the asset class as a candidate for additional allocation, particularly given its focus on diversification and a return stream that can be supported by collateral invested in risk free assets such as US Treasuries.