A report analysing trends in the insurance linked securities (ILS) market has found that positive net issuance during Q3 2013 is suggesting a continuous global expansion of the ILS market over the medium term.
The Bermuda Monetary Authority published the report analysing market trends in the market, which found that there is growth in alternative risk transfer (ART) instruments, with Bermuda's ILS market being a leading factor in that growth.
The report states that: “the majority of specialised insurance companies support the issuance of ILS, which have become the hallmark of an expanding ART market.”
The authors of the report believe that this is because sponsors of ILS have been attracted to the flexibility of the instruments, and the ability to fund underwriting exposures from a wide range of investors at a price similar to traditional reinsurance.
In Bermuda the outstanding amount of ILS issued represents more than 40 percent of the world-wide total. The islands also host foreign ILS listings, which have an aggregate nominal value of $7.3 billion.
The authority’s in-house macroprudential surveillance unit conducts the analysis for the report, and will produce it on a quarterly basis.
The report follows an ILS panel at the authority's international regulatory forum last week, and can be viewed here
