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Insurance-linked securities can diversify alternatives allocation, report says

The report argues ILS returns are driven mainly by insured catastrophe events rather than the business cycle.

Reported · Written up by our desk · Industry & Deals

Insurance-linked securities are positioned as a diversification tool within alternatives allocations, according to a new report highlighted by Artemis.

The report, authored by Andrew Poreda, vice president and senior research analyst at Sage Advisory Services, says many traditional alternatives ultimately track a limited set of economic and market drivers such as corporate earnings, financing costs, refinancing availability, exit valuations, and economic growth.

Poreda’s report contrasts that with ILS, stating returns are driven primarily by insured catastrophe events instead of the broader business cycle.

Artemis also notes the report frames ILS as one of the few allocations that can provide genuine diversification for portfolios that include private credit, private equity, real estate, and infrastructure.

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