Latest Insurance-Linked Securities (ILS) Report From Willis Capital Markets & Advisory Highlights Q2 2015 Activity
NEW YORK, July 16, 2015 (GLOBE NEWSWIRE) -- The reinsurance industry has seen more strategic restructuring within many Florida reinsurance programs in the first half of 2015, with commensurate gains for shareholders and policyholders, according to the latest ILS report from Willis Capital Markets & Advisory (“WCMA”), part of Willis Group Holdings plc (NYSE:WSH), the global risk advisory, re/insurance broking, and human capital and benefits firm.
The report notes, however, that the majority of re/insurers are missing the chance to restructure their reinsurance programs to better integrate ILS capacity and make greater performance and efficiency gains.
Bill Dubinsky, Managing Director and Head of ILS, WCMA, said: “Ceded reinsurance executives should not focus on using ILS to buy the same reinsurance program as in the past more cheaply. Insurers instead should be looking to restructure their reinsurance programs to better integrate ILS capacity and make more dramatic performance and efficiency gains, ultimately to the benefit of shareholders and policyholders.”
The report also notes that the reinsurance industry has been animated by initiatives such as Nephila’s fronting relationship with State National to enter the U.S. direct insurance business. “Such ventures are more toward the beginning and not the end of a wave of dramatic structural change caused by ILS moving from reinsurance to insurance,” Dubinsky said.
Q2 2015 Cat Bond Market Issuance Overview
The WCMA report outlines that the second quarter of 2015 saw $2.7 billion of non-life catastrophe bonds issued through nine transactions. This follows a historically strong first quarter in which the market saw $1.5 billion of issuance, and brings total non-life capacity issued year-to-date to $4.1 billion.
The report also highlights that indemnity deals dominated the second quarter of 2015, with all of the 144A transactions issued during the period having used an indemnity trigger.
Commenting on this trend, Dubinsky said, “The increase in indemnity trigger use in part reflects the increasing sophistication of the pool of investors as the market matures. The trigger migration also broadens the potential pool of sponsors as some insurers remain reluctant to expose themselves to potential basis risk resulting from index triggers, notwithstanding the potential premium savings from doing so.”
The Q2 2015 WCMA report also includes a Q&A interview with Franco Urlini, Group Head of Reinsurance, and Mirko Sartori, Head of Insurance Liability Management at Assicurazioni Generali SpA. The interview includes their views on the ILS market, how they would like to see products evolve, their considerations when approaching this market and the impact they see on pricing (ROL) of catastrophe reinsurance programs.
About Willis Capital Markets & Advisory
Willis Capital Markets & Advisory, with offices in New York, London and Hong Kong, 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)”).
Willis Group Holdings plc is a global risk advisory, re/insurance broking, and human capital and benefits firm. With roots dating to 1828, Willis operates today on every continent with more than 18,000 employees in over 400 offices. Willis offers its clients superior expertise, teamwork, innovation and market-leading products and professional services in risk management and transfer. Our experts rank among the world’s leading authorities on analytics, modelling and mitigation strategies at the intersection of global commerce and extreme events. Find more information at our website, www.willis.com, our leadership journal, Resilience, or our up-to-the-minute blog on breaking news, WillisWire. Across geographies, industries and specialisms, Willis provides its local and multinational clients with resilience for a risky world.
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