ILS market ready to deal with wake-up call of Q3 2017 natural catastrophes
October 20 2017 - 5:00AM
ILS investors are responding to the recent uptick in natural
disasters by making payments to ceding companies, whilst at the
same time continuing to raise more money and preparing to make new
investments. These are the main findings of the latest quarterly
ILS market update, from Willis Towers Watson Securities, the
investment banking business of leading global advisory, broking and
solutions company, Willis Towers Watson (NASDAQ:WLTW).
None of the tragic natural catastrophes in the third quarter –
two Mexican earthquakes and three Atlantic hurricanes – was
individually of the $100 billion loss amount that might trigger a
major shift in pricing. However, the aggregate losses from the
quarter are likely to reach $100 billion. A magnitude that serves
to remind the industry of the potential scale of losses it could
face and providing an effective test of its capitalisation, ability
to recapitalise and the resilience of the investor base.
Bill Dubinsky, Head of ILS at Willis Towers Watson Securities,
said: “Even though this is not ‘that year’, the recent loss
activity will provide some clues as to what might happen when it
does occur, and we can say that so far ILS investors and
traditional reinsurers have performed well, supporting insurers to
serve their policyholders. In particular, I would point to the
Mexican government’s FONDEN bond where the class A notes may see a
total loss of principal, delivering $150 million of disaster relief
where it is vitally needed.”
Interviewed for the report John Seo, Co-founder and MD at Fermat
Capital said: “For better or worse, after a significant loss event
many current and potential ILS investors are conditioned to put
additional or first-time capital into ILS. As a result, investor
interest in ILS is higher now than ever before. No doubt, this is
due, in part, to an expectation that some reinsurers and insurers
will firm up premiums for some programs in 2018 and that this might
have a spill-over effect on the ILS market and I expect ILS to
continue to play a role in moderating post-event rate
increases.”
Download the full Willis Towers Watson
Securities ILS Market Update
About Willis Towers Watson Securities Willis
Towers Watson Securities, with offices in New York, London, Hong
Kong and Sydney, 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 Towers Watson Securities 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 Towers Watson
Securities Europe Limited (Registered number 2908053 and ARBN
number 604 264 557), an investment business authorized and
regulated by the UK Financial Conduct Authority (“WTW Securities
Europe”) and Willis Towers Watson Securities (Hong Kong) Limited, a
corporation licensed and regulated by the Hong Kong Securities and
Futures Commission (“WTW Securities (HK)”).
About Willis Towers WatsonWillis Towers Watson
(NASDAQ:WLTW) is a leading global advisory, broking and solutions
company that helps clients around the world turn risk into a path
for growth. With roots dating to 1828, Willis Towers Watson has
40,000 employees serving more than 140 countries. We design and
deliver solutions that manage risk, optimize benefits, cultivate
talent, and expand the power of capital to protect and strengthen
institutions and individuals. Our unique perspective allows us to
see the critical intersections between talent, assets and ideas –
the dynamic formula that drives business performance. Together, we
unlock potential. Learn more at willistowerswatson.com
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Annie.Roberts@willistowerswatson.com
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