ARTICLE
22 November 2017

Interval Alts And Insurance-Linked Securities

KL
Herbert Smith Freehills Kramer LLP

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We are seeing Interval Alts (registered investment funds featuring hedge fund-like liquidity) being used for dedicated insurance-linked securities (ILS) strategies.
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We are seeing Interval Alts (registered investment funds featuring hedge fund-like liquidity) being used for dedicated insurance-linked securities (ILS) strategies. ILS, such as catastrophe, or "cat," bonds, provide sponsoring insurance and reinsurance companies with contingent funds to hedge the risk of specified insurable events, e.g., hurricanes, wildfires and earthquakes. With the recent natural catastrophes this summer and fall, insurer demand for loss protection is expected to rise, which could improve pricing for providers of risk protection, such as reinsurers or ILS investors. Interval Alt funds employing ILS strategies tend to be non-correlated with other financial products and offer their investors additional liquidity and execution benefits, as illustrated below.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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