ILS activity jumps 54% y-o-y in 1Q18 despite 2017 Nat CATs
Source: Middle East Insurance Review | Nov 2018
The first quarter of 2018 has been the strongest quarter in terms of issuance of insurance-linked securities (ILS) since 2009 despite significant Nat CAT losses in 2017 from hurricanes Harvey, Irma and Maria, according to the latest Bermuda ILS market report.
Issuance activity accelerated by 53.6% y-o-y with 17 new bonds issued totalling $4.3bn, compared to 15 deals and $2.8bn in 1Q17. During 1Q18, 11 deals matured with a notional value of $2.1bn, resulting in the net issuance of $2.2bn, said the report.
The average deal size for 1Q18 transactions was higher relative to the same quarter last year. The average deal size during the quarter was $253.4m, up from $185.4m in 1Q17. The largest deals of 1Q18 were issued by Allstate and the Republic of Chile, each in the amount of $500m. The smallest deal was in the amount of $5m.
Indemnity triggers remain the most popular trigger-type used in ILS deals, representing 60% of total outstanding volume in the ILS market. This is followed by the industry loss index trigger type which accounts for 23.9% of the outstanding volume, the report said.
The ILS market remains small relative to traditional reinsurance business. The $33.3bn of risk covered by ILS represents 5.5% of global reinsurer capital, estimated at $605bn. M