Investment - Articles - Insurance Linked Securities growth continues

 Following a strong Q4 2016, the market maintained momentum in the new year as the first quarter of 2017 saw US$1.7 billion of non-life catastrophe bond capacity issued through five transactions (record Q1 2016 saw $2 billion issued through nine deals).

 ILS funds continue to raise capital while sponsors respond to the attractive spread environment by seeking new protection backed by liquid ILS (catastrophe bonds) as well as continuing to work up protection in other forms. In the meantime spread levels and margins continue to decline as investors increase their capital and gain market share.

 The report says that as returns decline, ILS market participants need to find new structures to enhance returns, whether from more efficient collateral or otherwise.

 Bill Dubinsky, Head of ILS at Willis Towers Watson Securities, said: “As expected, assets under management have continued to grow at roughly the same pace as in 2016. This is against a backdrop of challenging market conditions as competition among various players intensifies. Looking ahead we can be confident that the ILS market will continue to expand and grow as reinsurers and other players invest in this space.

 “The breadth of the ILS market continues to expand not only by products and perils but also through increasingly differentiated risk-return appetites among the various investors.”
  

 Click here to downlaod the report Willis Towers Watson Securities ILS Market Update Q1 2017