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Insurance-linked investments - an asset class with low correlation to traditional markets

Insurance-linked investments are offered by insurance and reinsurance companies in order to transfer pure insurance risks to the capital markets. These instruments offer investors an attractive potential return with a low correlation to the financial markets.

Investment opportunities through transfer of insurance risks to capital markets

LGT has invested in insurance-linked strategies for over ten years. As one of the world's largest investment managers for insurance-linked investments, LGT Capital Partners offers public investment funds and individual mandates for institutional clients.

Investors benefit from insurance-linked investments through:

  • tapping into additional sources of diversification,
  • a lower correlation with traditional asset classes such as equities or bonds,
  • a growing market in the insurance and reinsurance industries
  • an optimized risk/return profile
  • one of the few asset classes to have generated consistent attractive returns since its emergence in the late 1990s.

Insurance-linked strategies as an asset class
Insurance and reinsurance companies are specialized in taking on event-driven risks from individuals and corporations. In the mid-1990s, the available capital in the insurance and reinsurance industry was no longer sufficient to cover extreme loss scenarios caused by natural disasters in the largest risk regions. As a result, the industry was forced to explore new ways to adequately hedge peak risks and raise capital. This led to the development of the market for insurance-linked investment vehicles, which enable insurance and reinsurance companies to transfer risks to capital markets.

For more information on investment solutions, please contact the specialists at LGT Capital Partners.



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LGT Capital Partners Ltd.
Phone: +41 55 415 9600

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