Insurance-linked securities continued at a healthy clip during the 2018 first half but failed to reach record levels hit last year, Swiss Re said in its latest report on the matter.
H1 2018 ILS issuance totaled more than $7.3 billion, including $4 billion in the second quarter, Swiss Re noted in its “Insurance-Linked Securities Market Update” for August.
For the 2017 first half, insurance-linked securities hit issuance levels of $8.4 billion.
The results show that the ILS market remains an effective way to provide insurance/reinsurance protection, Swiss Re said. According to the report, ILS issuance was resilient even in the wake of “frequent and sizable catastrophic events” such as the massive hurricanes and wildfires that struck in 2017.
“As investors patiently awaited loss developments for the latter half of 2017’s catastrophic U.S. hurricane and wildfire events, appetites were uninhibited by potential losses, and investors continued to allocate capital to ILS at a relatively stable price,” Swiss Re said about trends in the 2018 first half.
Swiss Re said the Q2 ILS issuance covered 14 separate transactions, primarily U.S. multiperil or state-specific wind coverage. As well, five new sponsors pursued ILS cover to help close the protection gap or complement traditional reinsurance in the 2018 first half.
For the 2018 first half, there were 20 new deals priced across 38 different tranches, and the average deal size was about $365 million. This surpassed the 2014 H1 record of $329 million, Swiss Re said.
The report pointed out that ILS issuance is typically larger in the first half of a year than the remaining six months, as sponsors pursue coverage ahead of the U.S. hurricane and severe thunderstorm seasons
Source: Swiss Re