Bermuda remains the global leading jurisdiction for the issuance of insurance-linked securities (ILS), according to the Q1 report from the Bermuda Monetary Authority (BMA).
The ‘Bermuda ILS Market Report’ for Q1 2018 revealed that ILS issued from the domicile represents 74.5 percent ($24.8 billion of $33.3 billion) of total outstanding capacity at the end of Q1 this year.
The report also showed that Q1 2018 was the strongest quarter in terms of issuance since 2009, with 17 new bonds issued globally totalling $4.3 billion. The BMA said this showed an acceleration in issuance activity of 53.6 percent year-over-year.
The average deal size for transactions in Q1 also grew in 2018, up to $253.4 million from $185.4 million last year.
North American perils account for the majority (60.2 percent / $20.1 billion) of total outstanding ILS volume globally, while Asian perils account for 13.4 percent ($4.5 billion) and multi-regional perils account for 10 percent ($3.3 billion).
More than half (50.8 percent) of total coverage for all perils ($16.9 billion of $33.3 billion) is sponsored by primary insurers, while 21.9 percent are sponsored by reinsurers, and the remainder sponsored by other types and unknown sponsors including private placement deals.
Despite its growth in Q1, the ILS market remains small in comparison to traditional reinsurance business. The $33.3 billion of risk covering by ILS represents 5.5 percent of global reinsurer capital, which is estimated at $605 billion.
BMA stated: “A sophisticated legal system, a strong regulatory framework, a developed infrastructure, as well as the local availability of highly-skilled human capital, underpin Bermuda’s reputation as a quality jurisdiction and domicile of choice for insurance, reinsurance and financial services’ companies.”
“Bermuda is known for its innovative reinsurance industry.”
