All quiet on the ILS front: but why?

The insurance-linked securities (ILS) market has been quiet of late but the industry appears split on why this is. Some blame nervousness following Hurricane Sandy, while others argue it is typical for this time of year.

Bill Dubinsky, head of ILS at Willis Capital Markets & Advisory (WCMA), says that the third quarter is typically a quiet period for new catastrophe bond issuance and this year is simply reflective of that.

A report released this week by WCMA, called Spreads Continue To Tighten As Sandy Impact Is Assessed, noted that any effect that Hurricane Sandy has had on the catastrophe bond market is likely to be muted and will have little impact on new pricing.

Others believe the storm has made investors nervous, however. In an interview with Intelligent Insurer yesterday, Luca Albertini, chief executive of Leadenhall Capital, said trading has reduced while investors assess the impact of the storm.

“Until there is better clarity, people are questioning why they should take these risks,” he said.