Increasing access to ILS


As the rise of the ILS market continues, Paul Schultz, CEO of Aon Benfield Securities, talks to Intelligent Insurer about the sector’s evolution and how, with moves to increase its accessibility, he expects a strong performance in the second half of the year.

How has the insurance–linked securities (ILS) market evolved in recent months?

A key trend is that we have seen a broadening in terms and conditions. As an example, the Castle Key transaction comes to mind, as the definition of ultimate net loss (UNL) was broader than in prior transactions. Also, the terms and conditions were almost identical to the terms and conditions in the traditional reinsurance market, which is significant. Over the years we’ve been narrowing the gap between the two markets, and this is the first time in a long time that we’ve seen such similarities in a complex structure.

Based on our forecast for the amount of new capital that is going to enter the market in the medium term, there is also going to be a need for broadening of coverages—moving from property cat to casualty and liability to ensure that we can supply the demand of this new capital.

ILS, Aon Benfield Securities, Paul Schultz

Intelligent Insurer