21 April 2016 Alternative Risk Transfer

Record-breaking Q1 for ILS issuance: Willis

The first quarter of 2016 saw a record breaking issuance volume of $2 billion of non-life insurance-linked securities (ILS) issuance.

This is according to the latest ILS market update from Willis Capital Markets & Advisory (WCMA), the investment banking business of Willis Towers Watson.

The first quarter issuance, which is 35 percent higher than last year’s first quarter, consisted of nine transactions and 13 tranches.

All the issuances were sponsored by repeat sponsors and the quarter ended with $23.2 billion outstanding, also a record for any quarter end.

The quarter was dominated by US transactions offering healthy returns to investors, according to the update, although two Japanese bonds, Akibare Re and Aozara Re, also featured.

Bill Dubinsky, head of ILS at WCMA, said: “The headline figure shows that a record level of nonlife ILS was placed during the first-quarter, highlighting the continued appetite for risk from investors and alternative reinsurance capital from ceding companies. Nonetheless, it is too early to say whether the strong Q1 issuance will translate to a record-breaking year.”

The report also touched on the fact that pension funds and consultants have increased their focus on transparency in cat modelling. As a result, ILS funds and ceding companies are responding with more modelling information.

Dubinsky said: “Going forward we may start to see similar pressure for better transparency in portfolio valuation. As with better modelling, more transparency in valuation will lead to a larger ILS market.”

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