ILS issuance reaches new Q1 record high

Insurance-linked securities (ILS) deal volume in the first quarter of 2017 reached a new record level for first quarter global issuances, according to the latest Bermuda ILS Market Report.

There were 14 new bonds issued, totalling $2.8 billion during the quarter to surpass the previous record level set in the first quarter of 2016 (10 deals; $2.2 billion). This volume is, however, below the $4.5 billion recorded in the second quarter of 2014.

At the same time, 18 deals matured in the first quarter with a notional value of $2.5 billion. The net issuance of bond volume increased the total stock of outstanding capacity to $27.1 billion, representing an increase of 2.6 percent year over year.

The largest deal during the first quarter was issued by Galilei 2017-1, a Bermuda-domiciled special purpose insurer (SPI) which provides coverage for multi-regional natural catastrophes in the amount of $525.0 million.

Indemnity triggers continue to be the most used trigger-type and account for more than 60.0 percent of the outstanding volume of ILS deals. Transactions with an indemnity trigger represent 62.6 percent ($17.0 billion of $27.1 billion) of total outstanding volume within the ILS market.

Bermuda continues to maintain its position as the leading jurisdiction for the issuance of ILS. Bermuda-based SPI’s accounted for 92.8 percent ($2.6 billion of $2.8 billion) of issuance volume during the quarter. During the period, Bermuda-based SPIs underwrote $2.6 billion of property and catastrophe risks via 13 ILS transactions covering several regions. Overall, Bermuda-issued ILS represents 73.9 percent ($20.1 of $27.1 billion) of total outstanding capacity at the end of the first quarter of 2017.

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