Money managers and mutual funds are moving into insurance-linked securities (ILS) investments, meaning the market will continue to add new reinsurance capacity.

In the first quarter $US1.2 billion ($1.27 billion) of non-life catastrophe bonds were issued in six deals, compared with $US1.6 billion ($1.7 billion) in five deals in the first quarter of last year.

Munich Re sponsored a bond providing three years of cover against US hurricane and Australian cyclone risk.

Willis Capital Markets & Advisory Head of ILS Bill Dubinsky says interest rate spreads are declining but fund managers still see significant value in the securities.