The life ILS market, like many alternative credit strategies, is facing challenges from the rising interest rate environment not only in terms of investor appetite but in terms of deal activity, as higher risk-free rates impact the extent to which life insurers can transfer risk to life ILS investors. But, like other life risk markets, it’s also facing challenges from changing mortality trends in terms of modelling that risk.
So, for this month’s poll, we asked our readers which of the two was the more prevalent. And the results were clear.
The need for higher deal flow was the landslide opinion; 87.88% of readers felt this was the case. The elevated interest rate environment looks like it will remain for a while yet, which would dampen demand.
But there is significant opportunity in the market in Asia, for example, where the life ILS space remains relatively nascent, and moats exist for life ILS managers which may mean that the current deal flow ‘challenge’ isn’t as pronounced as others in the alternative credit market.
