
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 |