Q1 2016 saw new issuance volume reach $2 billion of non-life capacity, breaking the record of any first quarter for the insurance-linked securities (ILS) market, according to Willis Capital Markets & Advisory.
Issued through nine transactions and 13 tranches, capacity was up 35 percent compared to the Q1 2015 total of $1.5 billion in seven deals.
Willis Capital Markets & Advisory’s report showed that all Q1 issuances were sponsored by repeat sponsors. It also reveals that Q1 2016 ended with $23.2 billion outstanding, also a record for any quarter end.
Apart from the Japanese bonds Akibare Re and Aozora Re, Q1 was dominated by US transactions. Merna Re 2016-1 was the only US transaction paying a coupon lower than 5 percent.
Bill Dubinsky, head of ILS at Willis Capital Markets & Advisory, said: “The headline figure shows that a record level of non-life ILS was placed during Q1, highlighting the continued appetite for risk from investors and alternative reinsurance capital from ceding companies. Nonetheless, it is too early to say whether the strong Q1 issuance will translate to a record-breaking year.”
The report also highlighted how pension funds and consultants have increased their focus on transparency in cat modeling, and as a result ILS funds and ceding companies are responding with more modeling information.
Dubinsky said: “Going forward we may start to see similar pressure for better transparency in portfolio valuation. As with better modeling, more transparency in valuation will lead to a larger ILS market.”
