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Insurance-linked securities grow in 2015 despite soft market


Overall nonlife alternative capital in insurance-linked securities grew to $70 billion by the end of 2015, according to a report released Tuesday by Willis Towers Watson P.L.C.

That overall total of $70 billion is up from $65 billion at the end of 2014, according to the report, “ILS Market Update: ILS Outlook Upbeat Amid a Persistent Soft Market.”

2016 could see an uptick from the $6.2 billion in 2015 issuance, possibly closer to $7 billion, said the report, as factors such as deal renewals work in favor of a higher total in 2016 rather than against it, as in 2015. Total 2014 issuance was $8.0 billion, said the report.

“Looking at the headline catastrophe bond figure, a decline in issuance appears to be the case. However, this general picture fails to account for the huge $1.5 billion transaction completed in 2014 — Citizens’ Everglades Re — which skews any prior-year comparison,” Bill Dubinsky, head of ILS at Willis Capital Markets & Advisory, said in a statement. The record $1.5 billion cat bond by Citizens Property Insurance Corp. covered its hurricane risks in Florida.

The fourth quarter of 2015 had new issuance of $1.4 billion of nonlife capacity in five transactions, compared with 2014 fourth quarter issuance of $2.1 billion in six deals.

“Overall, despite the soft market, the ILS market is healthy and of keen interest to institutional investors, insurers and reinsurers, and increasingly to corporates and governments as well,” Mr. Dubinsky said.