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The Actuary The magazine of the Institute & Faculty of Actuaries

Insurance-linked securities market set for growth phase

The firm's 'The fundamentals of insurance-linked securities' report found that, 15 years after its inception, the market is continuing to grow as reinsurers, governments and corporations continue to access capital market solutions to finance growth, manage their capital and transfer risks related to natural catastrophes and other extreme events.

Swiss Re has sponsored close to $10bn in transactions for its own protection. Through its appropriately licensed entities, the firm has underwritten more than $20bn of both life and non-life risk including third-party transactions.

"ILSs are an integral component of our product offering to clients and we are starting to see increasing demand for non-US peak risks," said Matthias Weber, head of property and specialty at Swiss Re. "By offering ILSs, Swiss Re can combine its strong origination and distribution platforms with its ability to assume basis risk and tail risk."

ILSs offer re/insurers, governments or corporations the ability to transfer their peak risks and thus allow them to complement and diversify their reinsurance protection. ILSs form an integral component in many sponsors' risk transfer programmes and there is a constant pipeline of ILS issuance supported by a committed investor base, according to the firm.

"The ILS market is strong and poised for continued growth," says Martin Bisping, head of non-life risk transformation. "Our investor and sponsor base is made up of stable long-term partners and we consistently generate new interest in the sector. We believe this combination will lead to a continuation of robust ILS market growth."