ILS generally provides a moderate level of return whose risk sources are completely unrelated to the traditional capital markets. This type of investment provides a unique source of uncorrelated and economically intuitive returns that are typically absent from most investment portfolios. Moreover, ILS has the potential to provide societal benefits by lowering the cost of insurance for end policyholders and diluting the risk of ruin for the most susceptible companies and regions. For institutional investors that are willing to accept the complexity, modest returns, and relatively small market size, we believe that ILS, and in particular natural catastrophe property insurance/reinsurance, can benefit a total portfolio when included as an illiquid diversifying strategy.