WTW Securities analysis shows capital growth and improved risk could make 2018 another record-breaking year for the ILS market
As the market recovers from recent natural disasters, replaces lost capital and investors show mounting interest in insurance-linked security products, 2018 is set to be another year of growth for the (ILS) market.
Insurance-linked securities are instruments which are sold to investors whose value is affected by an insured loss event
2017 was already a record-setting year for the ILS market and analysis by Willis Towers Watson Securities says it looks like it will continue to grow in 2018.
Non-life ILS provisions continued to increase and ended the year 2017 close to $10bn, and it is estimated that non-life ILS capital stood at $88bn at year end 2017, a year-on-year increase of 17% from 2016.
”This demonstrates that the ILS market was able to withstand the 2017 natural catastrophe losses,” the report says. ”It also shows that ILS capital is looking to both the short-term potential for modestly better risk spreads and the longer term opportunity to partner with reinsurers, insurers and insureds to fuel growth and ultimately make insurance more available and affordable.”
Bill Dubinsky, managing director and head of ILS at Willis Towers Watson Securities, said: “We see no end in sight to ILS growth. The ILS community is signalling that it is ready and open for business. 2018 is shaping up as a brutal battle for market share between, on the one hand, incumbent reinsurers and ILS investors trying to both maintain their positions and exact some rate increases and, on the other hand, other ILS investors and reinsurers trying to stake a claim to participate in additional risk.”