ILS market strong despite 2017 cat losses: Willis

The insurance-linked securities market remains robust in the wake of 2017’s catastrophe losses, according to a survey from Willis Towers Watson PLC, the broker said in a statement Monday.

The web-based survey of 117 global ILS participants conducted in June 2018 included 25 end investors, 27 ILS funds and 65 cedents, the survey said, groups that remain bullish on the market, according to Willis Towers Watson.

“Our research finds that each of the three groups of participating ILS constituents has weathered recent loss activity with their enthusiasm for ILS intact,” the survey said.

These investors, ILS funds and buyers now view such reinsurance products backed by alternative capital as “mainstream,” according to the survey, with one in four respondents deriving more than 30% of capacity from ILS.

Cedents and funds see growth both from increased usage as well as from covering risks outside property catastrophe, such as property per-risk, cyber and marine, according to a statement issued with the survey.

End investors see reinsurance as an established asset class, the statement added.

One key finding is that close to one-half of ILS buyers surveyed have recovered claims under their contracts, with the majority reporting the collections as a positive experience.

Despite 2017 losses, 48% of end investors increased their ILS allocation, while only 20% of end investors made reductions.

“The industry has widely reported the growth in the ILS market, and this comprehensive survey further supports the development of ILS as an asset class despite the challenges of the catastrophe events in 2017,” James Kent, Willis Re global chief executive officer, said in the statement. “For growth to continue, ILS investors will need to demonstrate the ability to innovate and provide optimal solutions to meet clients’ evolving needs.”