Bermuda’s innovation drives rapid ILS growth
The growth of the insurance linked securities (ILS) market in Bermuda has continued to exceed expectations – and the market’s innovation in the global risk transfer and risk financing marketplace as the reason for this.
That is the view of ILS Bermuda, a team of global players who are maximising the potential of the alternative reinsurance, convergence and insurance-linked securitisation marketplace.
From $6 billion of ILS listed on the Bermuda Stock Exchange (BSX) a year ago to $7 billion in July and, thanks to recent transactions, now $8 billion, the market has grown rapidly.
According to data from Munich Re, much of the growth in new capital coming into ILS in Bermuda is from institutional investors such as pension funds. Considering that Towers Perrin’s Global Pension Assets Study 2013 estimates that the top 13 major pension markets total nearly $30 trillion in assets, there is room for growth in the amount of those assets that could go towards the growing ILS asset class.
PwC’s Bermuda Insurance Leader, Arthur Wightman views the success of the convergence marketplace as being in part because of the opportunities for risk managers to hedge risk more effectively. “For certain risks it makes sense for a blend of traditional and alternative products to be purchased to transfer risk because that blend offers more bespoke protection at potentially lower aggregate cost,” said Wightman.
Wightman goes on to say: “Bermuda has a well-deserved reputation for being the innovation capital in the global risk transfer and risk financing marketplace and now is no exception – Bermuda is the world’s number one domicile for ILS. The market is in for tremendous growth as long as the focus is on innovation driving aggregate growth rather than fighting over share.”
Convergence 2013 will feature the industry’s thought leaders, sponsors and advisors. Registration is limited and by invitation-only. The event has attracted significant interest both at home and abroad and a key supporter of Convergence 2013 is the Bermuda Business Development Corporation (BBDC).
