In this context, Hilary shared insights on the optimal structure for an ILS manager in today’s market. “We believe what matters is organizational size. (…) A manager is able to achieve significant economies of scale when joining a well-established organization,” she explained.

This approach, Hilary added, allows underwriters and portfolio managers to focus entirely on the investment process. “Areas such as fund structuring, legal and compliance, human resources, finance and accounting, infrastructure, technology and facility management are outsourced to the servicing entity of the organization and allows to truly benefit from the economics of scale, i.e. from the size and a broader experience across various asset classes. (…) This reduces a variety of business risks up to the point where key man risks and succession planning are included as a standard management process within the organization.”

Next to the benefits of consolidation, Hilary also discussed that access to rated reinsurance paper is another key challenge for ILS managers. She pointed out that this is an area that LGT Capital Partners innovated on with its own affiliated Bermuda-based rated reinsurer Lumen Re.

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