Non-life ILS issuance could yet exceed $7 billion for the year as interest in the convergence space is sustained, according to a report published by Willis Capital Markets and Advisory.
The second quarter of 2013 saw $2.2 billion of new non-life issuance across 14 deals, building on a historically strong first quarter. The deals bring year-to-date issuance to $3.8 billion. Outstanding deals at year-end of 2013
Confidence was evident in the sector with nine out of ten of the sponsors being repeat issuers, with American Coastal Insurance Company being the latest issuer to enter the ILS market.
US bonds continue to predominate, with approximately 72 percent of deals exposed to US hurricane risk, according to Willis, but two diversifying perils made it into the market—Munich Re’s Queen Street VIII and the Turkish Cat Pool’s Bosphorus I Re. There was significant interest in both deals—the Bosphorus deal enlarging four times—and many commentators are suggesting that they will encourage the emergence of further diversifying deals.
The report asked a number of searching questions regarding the likely heading of the market including: whether convergence capital will expand beyond cat perils and a predominantly US focus; are flexible terms and conditions becoming more common and what are the implications of this flexibility; what are the implications of convergence capital for traditional reinsurance players; and the rising importance of timing ILS deals. As ILS goes increasingly mainstream, it seems likely interest in such deals is only likely to heighten.
Willis, ILS, convergence, alternative capital