ILS activity jumps 54% YOY following 2017 hurricanes

The first quarter of 2018 was the strongest quarter in terms of insurance-linked securities (ILS) issuance since 2009 despite significant catastrophe losses in 2017 from hurricanes Harvey, Irma and Maria, according to the September edition of the Bermuda ILS Market Report.

First quarter 2018 issuance activity accelerated by 53.6 percent year on year, according to the report. There were 17 new bonds issued, totalling $4.3 billion, compared to 15 deals and $2.8 billion in the first quarter of 2017. During the first quarter of 2018, 11 deals matured with a notional value of $2.1 billion, resulting in the net issuance of $2.2 billion, according to the report.

The average deal size for the first quarter of 2018 transactions was higher relative to the same quarter last year, the report noted. The average deal size during the quarter was $253.4 million, up from $185.4 million in the first quarter of 2017. The largest deals of the 2018 quarter were issued by Allstate and the Republic of Chile, each in the amount of $500.0 million.

Indemnity triggers remain the most popular trigger-type used in ILS deals, representing 60 percent ($20.0 billion of $33.3 billion) of total outstanding volume in the ILS market, the report notes. This is followed by the industry loss index trigger type which accounts for 23.9 percent of the outstanding volume.

ILS issued from Bermuda represented 74.5 percent ($24.8 billion of $33.3 billion) of total outstanding capacity at the end of the first quarter of 2018.

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