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Right now and for the medium-term, in the world of insurance-linked securities (ILS), “liquidity is king”, according to Erik Manning, Director at BMS Re in Bermuda, who believes ILS managers need to focus on finding more liquid ILS investment structures to offer to their clients.
Manning, speaking with Artemis at the Monte Carlo Rendez-Vous de Septembre industry event for reinsurance, explained that the cost of capital is important and, while the ILS opportunity is particularly good right now, ILS managers must remain aware of the challenges presented by global volatility as well as the high costs associated with financing on the capital markets.
Manning says that capacity remains a problem in reinsurance.
“On the property cat side we continue to see a general reduction in market-capacity, although as is typical this reduction has not been evenly distributed across the market, being more pronounced in some segments much more than others.
“The high cost of financing and credit (relative to the past 10 years at least) is in fact one of the bigger drivers of that capacity pull-back and indications…