Private ILS funds outperform cat bonds in September and YTD
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Private ILS funds outperform cat bonds in September and YTD

US Currency: Wads of US bills fastened with rubber bands, close-up

Private ILS funds outperformed cat bonds in September, returning 1.42%, data from ILS Advisers has shown.

ILS Advisers/News/ILS funds/Catastrophe bonds

Cat bond funds returned 1% in September, meaning private ILS funds have just outperformed cat bond funds for the year to date, on a 10.8% gain compared to 10.6% for cat bond funds. This is based on Trading Risk calculations compounding the initial reported data from ILS Advisers.

The average ILS fund was up by 1.23% in the month, taking year-to-date gains to 10.75%, as measured by the Eurekahedge ILS Advisers Index, with 2023 on track to be the strongest-performing year since 2008.

September was the third-best-performing month this year, behind a 1.29% return in June and a 1.48% return in August.

It was also the third-strongest September since 2008, behind 2019, which returned 1.42% and 2009 which returned 1.58%, according to ILS Advisers data.

Two of the 27 funds being tracked by the index had a negative month, with a wide range of returns from a 1.53% loss to a 4.31% gain.

Seven named storms developed over the Atlantic during September, three of which reached hurricane force winds.

Hurricane Lee briefly reached Category 5 speed before slowing ahead of landfall in Nova Scotia.

Morocco was hit by a 6.8 magnitude earthquake while Storm Daniel resulted in torrential rain and flooding in Libya.

Economic losses for both events are expected to be substantial, although insured losses will remain limited due to low insurance penetration in Northern Africa.

The primary cat bond market remained typically inactive in September, often hurricane season’s peak, with prices losing 0.14%, resulting in a 0.87% total return for the Swiss Re Global Cat Bond Index.

A healthy pipeline of new cat bond issuance is expected in Q4.

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