Insurance Linked Securities Market Grows to $93B in 2018: Willis Re

February 18, 2019

Growth of the insurance linked securities (ILS) market reached $93 billion in 2018, up from $88 billion during the prior year, according to the new ILS Market Update from Willis Re, the reinsurance division of Willis Towers Watson.

In the face of multiple smaller catastrophic events in 2018 and a meaningful series of catastrophes in 2017, non-life cat bond issuance remained strong with about $9.2 billion of new capital delivered, said the report, defining cat bonds as ILS transactions with meaningful liquidity.

Willis Re noted that 2018 marked the second-most active calendar year for cat bond issuance after 2017’s record of $9.7 billion.

Of $535 million in bonds issued during the fourth quarter of 2018, $125 million of capacity will provide protection from California wildfire liability, $200 million will provide peak multiperil protection, and $210 million will provide U.S. earthquake (workers’ compensation) protection.

Lines of demarcation within the ILS space are blurring, according to the report, as ceding companies and intermediaries look to the range of cat bonds, sidecars, and other collateralized ILS, to identify the best tools to meet specific challenges, continue to develop new solutions, and refine existing structures.

“We are seeing the convergence of convergence,” says William Dubinsky, managing director & head of ILS at Willis Towers Watson Securities.

“The overall ILS figure is today a much more meaningful measurement of market size than focusing on cat bond and sidecar issuance alone,” he said. “ILS capacity and products are growing organically and dynamically as gaps between different products and subsectors fill in, and innovation and market necessity create new capacity and products. Our confidence in the speed that new solutions will emerge gives us a favorable outlook for ILS in 2019.”

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