Are Life Insurance Linked Securities an emerging standalone asset class?
Or are they forever consigned to being simply a convenient add-on to a broader ILS strategy?
Life Insurance Linked Securities (Life ILS) are structured life reinsurance solutions packaged in investible form for capital markets investors.
In this article we argue that Life ILS are a bona fide alternative fixed income asset class, given features such as long-dated cashflows and low correlation with other asset classes.
These characteristics differ substantially from more common forms of ILS, such as cat bonds, which cover natural catastrophe risks and other non Llife ILS.
Furthermore, due to increasing demand in the life insurance industry, we expect Life ILS will develop into a more mature asset class over the coming years.