ILS101: Insurance-Linked Securities

The foundational module covering the full spectrum of ILS instruments, from the rationale for risk transfer through to pricing, structuring, and portfolio construction. Learners progress from basic concepts to advanced analysis of cat bonds, sidecars, ILWs, and collateralised reinsurance.

• 1. Global Risk Landscapes and the Requirement for Risk Transfer
• 2. What are ILS Part 1 — Catalyst, Market Data, Cat Bond Structure & Term Sheet
• 3. What are ILS Part 2 — Sidecars, Collateralised Reinsurance, ILWs & Weather Derivatives
• 4. What are ILS Part 3 — Advantages of ILS, Uncorrelated Returns, Losses & Spreads
• 5. What are ILS Part 4 — Triggers and How They Work
• 6. ILS Pricing Part 1
• 7. ILS Pricing Part 2
• 8. Why and How (Re)insurers Use ILS
• 9. Sovereign Disaster Risk Management

• ✓ Explain the rationale for catastrophe risk transfer and the role of ILS in the global reinsurance market
• ✓ Analyse cat bond structures including SPVs, trigger types, term sheets, and the issuance lifecycle
• ✓ Differentiate between ILS instruments: cat bonds, sidecars, collateralised reinsurance, ILWs, and weather derivatives
• ✓ Interpret catastrophe risk models and key metrics including expected loss, attachment probability, and exhaustion probability
• ✓ Evaluate ILS pricing dynamics, spread analysis, and secondary market valuation
• ✓ Assess the advantages of ILS as an uncorrelated asset class and analyse historical loss and spread data
• ✓ Understand how sponsors use ILS for capital relief, capacity management, and peak peril transfer
• ✓ Apply principles of sovereign disaster risk management and government-sponsored catastrophe programmes

Provides a scientific grounding in the atmospheric and oceanic systems that drive catastrophe risk, including tropical cyclone mechanics, sea surface temperatures, and climate indices (ENSO, AMO, MJO) used in ILS risk assessment and pricing. Includes an interactive Climate Data Centre with live sea surface temperature charts and ENSO phase analysis.

Explores the intersection of cyber risk and insurance-linked securities, including the cyber threat landscape, cyber catastrophe bond structures, and the modelling challenges of man-made systemic risk.

Covers index-based insurance products and parametric risk transfer, including trigger design, basis risk, and the role of parametric solutions in emerging markets and sovereign disaster risk management.

Covers the legal documentation, regulatory capital treatment, and compliance frameworks governing ILS transactions, including ISDA documentation, Solvency II, and SPV domicile structures.