The insurance-linked securities market saw non-life ILS capital grow in 2016, according to the latest ILS market update from Willis Capital Markets and Advisory.
According to the report, the growth came as the market continued to diversify into new products and perils to meet the demands of its increasingly broad group of investors.
Total ILS assets under management in 2016 grew to $75 billion, up from $70 billion the previous year. In the fourth quarter of 2016 the ILS market saw a pick-up, with $2 billion of non-life catastrophe bond capacity issued through five transactions, compared to $1.4 billion issued in the same period of 2015.
All fourth quarter issuances came from repeat sponsors, they did, however, bring diversifying perils to investors. Assicurazioni Generali’s Horse Capital I, covering motor third party liability risk was the first bond since 2007 to do so, while XL Bermuda’s Galilei I Re was the first bond to cover Australian tropical cyclone and Australian earthquake since 2013.
Bill Dubinsky, head of ILS at WCMA, said: “The size of the ILS market continued to grow in 2016, reaching $75 billion. Growth alone was not, however, the whole story as diversification by peril became increasingly important to investors, as did different approaches to liquidity and leverage, dependent on each investor’s appetite for ILS risk.”
On the market outlook for 2017, Dubinsky said: “Our 2017 expectation is that assets under management will continue to grow at roughly the same pace as in 2016. Leverage and diversity will also increase, led by a greater level of sophistication amongst the established investor base. At the same time, newer investors will continue to seek the greater liquidity that the traditional cat bond product offers.”
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ILS, Willis Capital Markets, Report, Bermuda