WILLIS TOWERS WATSON: REINSURANCE PRODUCTS BACKED BY ‘ALTERNATIVE’ CAPITAL HAVE BECOME MAINSTREAM

End investors, Insurance-Linked Securities (ILS) funds, and buyers – the three groups active in ILS – have predominantly weathered 2017 loss activity with a view that reinsurance products backed by ‘alternative’ capital have become mainstream, according to a new Global ILS Market Survey by Willis Towers Watson.

The survey of all three constituents of the ILS market was conducted more than six months after the major 2017 losses. Responses are therefore informed by the crystallization of ILS funds’ performance1.

Cedants and funds share the view that ILS will continue to grow, partly through increased usage, and partly by covering risks outside property catastrophe, such as property per-risk, cyber, and marine. Investors and cedants alike continue to show appetite for such transactions.

James KENT, Global Chief Executive Officer, Willis Re commented: “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. From a Willis Re perspective we see a divergence in the intent of (re)insurers to utilise ILS capacity largely driven by client type. For growth to continue, ILS investors will need to demonstrate the ability to innovate and provide optimal solutions to meet clients’ evolving needs. Furthermore, the trust language, where used, will need to reflect a closer alignment with clients’ expectations. The ILS investors with longstanding and successful track records, supported by consistent and well-regarded management teams, are the ones best equipped for future success.”

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