Hedge funds and other managers of catastrophe bond funds racked up some of the worst losses in more than a decade from this year’s hurricanes and wildfires.

But a year that is shaping up to be the costliest on record for insurance losses from natural disasters is nonetheless clearing a path for new fund launches.

Credit Suisse Asset Management, Securis Investment Partners and Stone Ridge Asset Management are all launching new funds in insurance-linked securities (ILS) such as catastrophe bonds, sources say.

Reinsurance rates are expected to rise up to 20 percent at key Jan. 1 renewals due to greater demand for cover after three major hurricanes in the United States and Caribbean, earthquakes in Mexico and wildfires still raging in California.

That should translate into higher ILS yields, potentially drawing in new return-seeking investors, industry specialists say.

“We are seeing (investors) take a fresh look. It’s a good addition to a portfolio in the long run and good now from a tactical perspective – an attractive entry point,” said Chris Walvoord, partner, global head of hedge fund research at Aon Hewitt.

That entry point comes after hedge fund-run ILS funds lost 6.6 percent in the year to end-November, data from industry tracker Eurekahedge showed.

“Right now, these funds are just estimating their losses, but by the first quarter of 2018 the full extent of the losses will be clear which could usher in fund closures,” said Mohammad Hassan, head of hedge-fund analysis at Eurekahedge.

“This year was the ILS’s version of GFC (global financial crisis) 2008 – the steepest losses on record for ILS hedge funds in more than a decade.”

Across the industry, hurricanes alone could lead to losses of $100 billion this year, according to risk modeling agencies and reinsurers.

That compares with losses of about $74 billion caused by Hurricane Katrina, which hit New Orleans in 2005.

Catastrophe bonds and other ILS package insurance risk in debt form. They offer high yields but default if a specified natural disaster or series of natural disasters takes place.

Several bonds have already been marked down sharply, particularly in Florida, industry sources say, on expectations that losses will be severe enough to trigger non-payment to investors.

ILS loss estimates in the secondary market range from $1 billion to $2.5 billion, according to specialist consultancy Lane Financial.

“We can already see who went swimming without bathing trunks and a few who were clearly out of their depth in the storms and wildfires of 2017,” said Christine Farquhar, head of fixed income research for EMEA at Cambridge Associates.

The ILS alternative to reinsurance is growing. It totalled $89 billion in June 2017, compared with $516 billion in traditional reinsurance, according to broker Aon Benfield.

Once the preserve of risk-taking investors, ILS have appealed in recent years to mainstream investors such as pension funds, family offices and high net worth individuals, due to their relatively high yield and lack of correlation to financial markets.

Chris Rule, chief investment officer of Local Pensions Partnership, made up of two large UK local government pension schemes, said one of the schemes had invested this year in ILS fund Aeolus Capital Management, backed by hedge fund Elliott, and could make further ILS bets.

“The discussion we are having now is whether premiums have expanded sufficiently to warrant a larger allocation,” he said.

Credit Suisse is in the process of launching two new ILS funds, according to two sources close to the firm.

ILS hedge fund manager Securis and asset management firm Stone Ridge are also launching new funds, sources said.

A spokeswoman at Credit Suisse declined to comment while Securis and Stone Ridge did not respond to requests.

Other ILS managers have enjoyed an injection of investor cash.

ILS assets at hedge fund manager Leadenhall Capital Partners grew to $4.5 billion in December, from $3.5 billion at the start of the year, a spokesman for the firm told Reuters.

Markel CatCo Investment Management has also raised over $1.8 billion for its private ILS fund.

“Yields have risen and business is getting done on much better terms than we have seen since 2013,” said Farquhar at Cambridge. “It’s the only credit-like market where yields are rising and won’t be round historic lows going into next year.”

However, some industry watchers are doubtful reinsurance rates will rise so much, given strong competition which has contributed to several years of falling rates.

UBS analysts said they expected reinsurance price rises to be “localized” to those areas hit by the disasters.

“Versus initial post-loss commentary, companies are now more measured,” they said in a note.

(Additional reporting by Noor Zainab Hussain.)