Q1 2017 saw $1.7 billion of non-life catastrophe bond capacity issued through five insurance-linked (ILS) securities transactions, Willis Towers Watson Securities has reported.
This was down slightly year-over-year, although Q1 2016 was a record for issuances, with $2 billion issued through nine deals.
“The ILS market is firing on all cylinders in early 2017,” Willis Towers Watson Securities commented in its ILS market update.
“There is a robust pipeline with nearly a record level of deals completed. ILS funds are raising capital and putting it to work. Sponsors are responding to the attractive spread environment by seeking new protection backed by liquid ILS (cat bonds) as well as continuing to ramp up protection in other forms. A record year seems possible.”
The firm added: “While spread levels have exited free fall, they continue to decline as investors put more money to work and grab market share. The breadth of the ILS market continues to expand not only by products and perils but also in the diversity of ILS investor risk-return appetites.”
Bill Dubinsky, head of ILS at Willis Towers Watson Securities, commented: “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.”