Securities and Contracts

Two forms of Insurance Linked Investments:
Insurance Linked Securities and Financial Insurance Contracts

Insurance Linked Securities (ILS) Financial Insurance Contracts (FIC)
Form Fixed-income securities Customised contract
Return Collateral Yiel + Premium/Spread
(typically 2% to 15%)
Collateral Yield + Premium/Spread
(typically 2% to 40%)
Term 12 to 60 months 6 to 18 months
Liquidity Liquid, tradeable asset Illiquid, non-tradeable asset
Payout If there is an event and specific triggers are met, cat bond pays out If there is an event and specific triggers are met, insurance seller pays out
Market Size USD 14bn USD 156bn