The insurance-linked securities (ILS) market gathered in New York City on February 10, 2023, for its seventh annual ILS NYC conference, hosting 380 attendees for a full day of discussions about the sector’s transformation following years of significant losses.
Unlike previous events that concentrated solely on recovery efforts, this year’s conference broadened its focus to examine how the ILS asset class itself was adapting. Discussions explored whether recent catastrophes could expand the market’s risk offerings, making it a more viable option for investors and insurers alike. Participants also analyzed how ILS managers should handle renewals in a market where pricing fundamentals appeared to have shifted permanently.
The central challenge at the conference was how ILS funds could restore investor confidence after a series of high-profile losses. Early sessions identified two primary approaches. The first involved refining risk selection to avoid excessive exposure in vulnerable regions, particularly Florida, where hurricane risks remained a critical concern. The second strategy focused on proving that ILS structures could still deliver returns even during periods of volatility, a claim put to the test by consecutive disasters like Hurricane Ian and the 2022 wildfire seasons.
The conference’s program reflected its dual priorities. A session titled (re)setting expectations in catastrophe bonds featured John Seo, co-founder of Fermat Capital, alongside executives from Swiss Re, Leadenhall Capital, and Vantage Risk. Their conversation centered on whether the market had stabilized—or if another major event would trigger another adjustment. Simultaneously, a parallel track addressed collateralized and private ILS markets, where liquidity concerns had intensified since the pandemic.
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Florida’s Risk Pool Under Pressure
A prominent panel, (re)constructing a healthy market, examined Florida’s role within the ILS ecosystem. With Citizens Property Insurance Corporation, the state’s last-resort insurer, facing financial strain, speakers including Jennifer Montero, its chief financial officer, discussed whether ILS could help stabilize the region’s risk pool. The discussion highlighted the difficulty of aligning ILS structures with Florida’s unique exposure, where secondary perils like flooding and wind now shaped underwriting decisions.
The event’s format balanced high-level strategy with detailed case studies, culminating in a moderator-led Q&A where panel leaders summarized key insights. Networking remained central, with a cocktail reception and expo space where sponsors showcased new risk-modeling tools and capital deployment solutions.
Logistically, the conference returned to Convene, the same modern venue used in 2020, after relocating in 2022. Organizers praised its flexible layout, particularly its quiet meeting areas—a feature valued by an industry where private discussions often drive deal flow.
As attendees departed, they carried a clearer understanding of ILS’s trajectory but also lingering uncertainties. The market’s ability to attract new capital depended on demonstrating steady returns while absorbing future shocks. Whether this equilibrium could be achieved remained the defining question of ILS NYC 2023.
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Parametric Triggers and AI Redefine ILS
The final session, (Re)newed Opportunities, shifted to emerging trends in ILS product design and capital allocation. Speakers noted that recent catastrophes had accelerated innovation in risk transfer, particularly in areas where traditional reinsurance had fallen short. One example was the increasing use of parametric triggers, automated payouts tied to predefined event metrics, to extend coverage for secondary perils like flooding and wildfire smoke damage. These products, already deployed in Florida, were positioned as a way to attract investors by simplifying claims processes.
Participants also explored how technology startups were transforming ILS underwriting. Vesttoo, represented by its chief commercial officer, presented AI-driven tools designed to refine risk selection and enhance transparency for investors. The conversation emphasized that while ILS had historically relied on human judgment, data-driven methods could help managers avoid overconcentration in high-risk areas. A recurring point was that the most effective funds would integrate traditional expertise with these new analytical approaches, especially as capital markets increasingly demanded measurable risk-adjusted performance.
In the closing Q&A, the four session leaders, including John Seo of Fermat Capital and Judith Klugman of Swiss Re, stressed that the ILS market’s future depended on three key factors. First, they needed to demonstrate consistent performance despite recent losses, requiring disciplined risk management and clearer investor communications about the long-term nature of ILS returns. Second, expanding the range of covered risks was essential, moving beyond traditional catastrophe bonds to include perils like cyber threats and climate-related secondary impacts. Third, liquidity management remained critical, particularly in collateralized and private ILS segments, where investor demand had fluctuated since the pandemic.
Public vs. Private ILS: Liquidity Divide
Following the event, Artemis released recordings of all sessions, accessible to registered attendees. The videos included unedited discussions from panels like (Re)building Confidence, where executives from Schroders Capital and Artex Capital Solutions debated whether the collateralized ILS market could restore pre-pandemic liquidity levels. A recurring theme in the recordings was the contrast between public markets, where ILS funds faced scrutiny over recent underperformance, and private structures, where managers had greater flexibility to adjust terms. The distinction highlighted a persistent obstacle: persuading institutional investors that ILS remained a viable alternative to traditional fixed-income assets despite years of market volatility.