The insurance-linked securities (ILS) market has experienced a historic start to 2018, with $3.1 billion of underwritten widely distributed non-life ILS capacity in the first quarter of this year, according to a report by Willis Towers Watson (WTW).
The ILS Market Update Q1 2018 report revealed that the record breaking $3.1 billion was issued through five catastrophe bonds.
A vast improvement on the $1.7 billion issued in during the same period in 2017, Q1 this year broke the record of $2 billion held by Q1 2016, and was the third-highest quarter ever.
The first quarter was dominated by diversifying transactions, other than Allstate bond Sanders Re 2018-1. The other deals were sponsored by Mexico, Chile, Colombia and Peru, and by Japanese cedant: Zenkyoren, Mitsui Sumitomo Insurance and Tokio Marine & Nichido Fire.
Unlike 2016 when the market struggled in Q2, however, WTW suggested Q2 this year would be robust.
William Dubinsky, managing director and head of ILS, said: “We expect the current trends in ILS growth to continue.”
“Without a true surprise loss, like an ice-storm in Miami, end-investors will continue to allocate capacity to ILS.”
“Yield increases under government bonds are expected to be neutral or maybe even slightly positive for issuance and asset growth, and even more importantly, we will continue to see a trend towards true syndication, reducing the power of large leading markets.”