"Early in the development of ILS, the typical structure included a total return swap (TRS) in which a counterparty guaranteed the liquidity and performance of the investments held by the collateral trust.
Since the financial crisis, and due in part to bankruptcy of some TRS counterparties (such as Lehman Brothers), with current ILS, there is less reliance on TRS counterparties and greater reliance on collateral liquidity.
Insurance Linked Securities – NAIC Primer
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