Bermuda, 09 January 2020
Interest in the Insurance-linked securities (ILS) sector is an attractive option for investors seeking to diversify their portfolios. However, multiple large-scale catastrophes in recent years – such as the Californian wildfires, Hurricanes Harvey, Irma, Maria and Michael and Typhoons such as Jebi and Hagibis– have brought challenges to administering ILS funds due to the uncertainty of quantifying losses. This uncertainly can lead to concerns with liquidity and valuation which can impact ILS managers and investors.
Expertise has become the name of the game for ILS fund administrators as managers of ILS funds are turning away from “catch-all” administrators towards ones that are evolving and specializing with the market. Centaur looks at trends in administration for ILS as the market continues to mature and investors become more discerning:
EXPERIENCE AND ACCOUNTABILITY
Launching an ILS fund can be challenging but can be simplified with the right team. Experience counts, as does accountability. Successful fund administrators must have the expertise to understand this market along with its idiosyncrasies while ensuring that investors remain reassured that their needs are being fulfilled.
Des Johnson, CEO of Centaur USA, comments, “Centaur provides a one-stop solution to its clients providing administration services to ILS Managers from pre-launch to an active ILS structure. We have the most experienced ILS team in the business, who are on hand to provide expertise and assistance to ensure a seamless launch or transition of ILS structures.”
INCREASING DEMANDS FROM INVESTORS
The interest in ILS comes at a time of increased reporting commitments to regulators and investors. This coupled with greater complexity in the ILS sector has led to a focus on administrators and the quality of their service. Technology is key to supporting these changes and managers are turning to their fund administrators to ensure they have the necessary skillsets to service the fund into the future.
Des believes that the ILS industry will be driven by innovation, without compromising on experience: “Precision and consistency are core to Centaur’s ethos. Our ILS team is comprised of specialists working exclusively in the asset class who have the essential expertise and experience to service sophisticated ILS structures.”
INCREASING REGULATORY REQUIREMENTS
FATCA, CRS, AIFMD are just some examples of regulations that now impact ILS structures and reinsurance managers. They are seeking out administrators that are both skilled and experienced in dealing with the challenges of regulatory reporting. Centaur has developed a suite of services to help its clients focus on managing the complexities of their portfolios.
Des says, “Centaur’s Compliance Team has an in-depth knowledge of the unique governance issues faced within ILS and our services meet the requirements of our client’s ILS products.”
TECHNOLOGY DRIVING CHANGE
The ILS sector is still a relatively young market so has the potential to adapt fast to technological change. Fund Managers are quickly realizing that spreadsheets don’t suffice anymore. Leading fund administrators, such as Centaur, invest heavily in their technology platform. This ensures open, transparent, customizable and most importantly, secure reporting, based on client requirements.
Des comments, “Managers have access to Centaur’s leading technology without the cost and time associated with implementing and maintaining in-house systems. Most importantly, this technology is shaped by an experienced team who work closely with clients to develop customized solutions to suit their requirements. Our platform captures and reports on all the key ILS related attributes in an automated fashion allowing us to deliver dynamic reporting to Investors saving our ILS clients time and cost.”