The machinery of the capital markets and insurance-linked securities are now working in harmony, observers say. Despite a drop in volumes during 2010, there are signs that investor appetite for ILS has turned a corner.
Even the most pessimistic predictions say that $5 billion of insurancelinked securities contracts will be signed by the end of 2010.
While the figure itself is not as high as before the financial crisis, insurers and brokers regard the rapid return of investor demand as a sign that the ILS market will start to see its full potential.
The size of that potential is anyone’s guess. However, most practitioners agree that at just $11.8 billion in outstanding risk capital—equivalent to just 5 percent of global reinsurance premium*—the ILS market has ample room for growth.
ILS, capital markets, insurance-linked securities, Swiss Re