ILS market sees record setting start to 2016: $2bn in first quarter

NEW YORK, April 20, 2016 -- Breaking Q1 2015’s record, the first quarter of 2016 saw new issuance volume of $2.0 billion of non-life capacity, the most of any first quarter in history, according to the latest ILS market update from Willis Capital Markets & Advisory, the investment banking business of leading global advisory, broking and solutions company, Willis Towers Watson (NASDAQ:WLTW).

Issued through nine transactions and 13 tranches, capacity was up 35% compared to Q1 2015’s $1.5 billion in seven deals. According to the report, all first quarter issuances were sponsored by repeat sponsors. In addition, Q1 2016 ended with $23.2 billion outstanding, also a record for any quarter end.

Other than the Japanese bonds Akibare Re and Aozora Re, the first quarter was dominated by U.S. transactions offering healthy returns to investors. Merna Re 2016-1 was the only U.S. transaction paying a coupon lower than 5.00%.

Bill Dubinsky, Head of Insurance-Linked Securities (ILS) at WCMA, said: “The headline figure shows that a record level of nonlife ILS was placed during the first-quarter, highlighting the continued appetite for risk from investors and alternative reinsurance capital from ceding companies. Nonetheless, it is too early to say whether the strong Q1 issuance will translate to a record-breaking year.”

Elsewhere in the report WCMA highlights how pension funds and consultants have increased their focus on transparency in cat modeling, and as a results ILS funds and ceding companies are responding with more modeling information.

Commenting on this trend, Dubinsky said: “Going forward we may start to see similar pressure for better transparency in portfolio valuation. As with better modeling, more transparency in valuation will lead to a larger ILS market.”

The report also comments on A.M. Best’s proposed revisions for the calculation of the U.S. Property & Casualty BCAR. The changes could have a potential impact on reinsurance and ILS demand from impacted US P&C (re)insurers.

For more details and to access the full WCMA ILS Market Update report, please click here.

About Willis Capital Markets & Advisory
Willis Capital Markets & Advisory, with offices in New York, London, Hong Kong and Sydney, provides advice to companies involved in the insurance and reinsurance industry on a broad array of mergers and acquisition transactions as well as capital markets products, including acting as underwriter or agent for primary issuances, operating a secondary insurance-linked securities trading desk and engaging in general capital markets and strategic advisory work. Willis Capital Markets & Advisory (“WCMA”) is a trade name used by Willis Securities, Inc., a licensed broker dealer authorized and regulated by FINRA and a member of SIPC (“WSI”), Willis Capital Markets & Advisory Limited (Registered number 2908053 and ARBN number 604 264 557), an investment business authorized and regulated by the UK Financial Conduct Authority (“WCMAL”) and Willis Capital Markets & Advisory (Hong Kong) Limited, a corporation licensed and regulated by the Hong Kong Securities and Futures Commission (“WCMAL (HK)”).

About Willis Towers Watson
Willis Towers Watson (NASDAQ:WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 39,000 employees in more than 120 territories. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com. 

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