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Record year for ILS ‘incredibly likely’: Willis

The global non-life insurance-linked securities (ILS) market remains on course for a record year despite a subdued third quarter, Willis Capital Markets & Advisory says.

The US group’s latest market update predicts a final issuance of $US8-9 billion ($9.13-$10.27 billion), breaking the previous best of more than $US7 billion ($7.99 billion) in 2007.

Only one transaction came to market in the third quarter of this year – State Fund’s Golden State Re II, which covers workers’ compensation risk against earthquakes.

This compares with a record $US1.4 billion ($1.6 billion) of non-life catastrophe bond capacity that was issued in the corresponding period last year.

Willis Capital CEO Tony Ursano says only $US1.2 billion ($1.37 billion) more is required this year to break the 2007 record. “We believe this is incredibly likely.”

The report says deals have become more diversified, with more individualised approaches to positioning ILS capacity in existing reinsurance structures.

“This indicates that ILS has broader potential application than many previously thought and hints at continued market growth,” Willis says.