$93bn ILS market grew 5.6% in 2018 despite Q4 slowdown


The global non-life insurance-linked securities (ILS) market grew to $93 billion at the end of 2018, up from $88 billion year-on-year, despite a substantial slowdown in the fourth quarter.

This is according to Willis Towers Watson's ILS Market Update Q4 2019, which highlighted that non-life cat bond issuance remained strong in the face of multiple smaller catastrophic events in 2018 and a meaningful series of catastrophes in 2017. Around $9.2 billion of new capital was delivered, making it the second most active calendar year on record.

In the fourth quarter of 2018, around $535 million in bonds were issued. This included $125m providing protection for California wildfire liability, $200m granting peak multi-peril protection, and $210m covering US earthquakes (workers' compensation).

The report suggested that the lines between ILS tools and structures are blurring, as ceding companies and intermediaries look to the range of cat bonds, sidecars, and other collateralised ILS available to meet specific challenges.

Willis Towers Watson added that this blurring of categories  should help the ILS market to overcome concerns including prompt loss reporting, valuation accuracy, collateral release and rollover, and increasing volatility, the report contends.

“We are seeing the convergence of convergence,” says William Dubinsky, managing director and head of ILS at Willis Towers Watson Securities.

“The overall ILS figure is today a much more meaningful measurement of market size than focusing on cat bond and sidecar issuance alone. ILS capacity and products are growing organically and dynamically as gaps between different products and subsectors fill in, and innovation and market necessity create new capacity and products. Our confidence in the speed that new solutions will emerge gives us a favourable outlook for ILS in 2019.”

The Bermuda Monetary Authority (BMA) recently published its Alternative Capital Report 2018, which found that Bermuda's $51.9bn alternative cpaital business accounts for around 58 percent of the global total.

Willis Towers Watson, ILS, Report, Catastrophe, Bermuda

Bermuda Re