ILS listings on Bermuda BSX up by 16% in H1 2017 to $24.5 billion

The total number of insurance-linked listings of catastrophe bonds, insurance-linked securities (ILS), reinsurance sidecar notes and insurance linked investments on the Bermuda Stock Exchange (BSX) grew by another 16% during the first six months of 2017, to a new high of $24.5 billion.

Up from the $21.22 billion of ILS listings’ value at the end of 2016, the $24.5 billion recorded as at June 30^th, 2017, is another new high for the BSX.

61 new ILS listings listed on the exchange in 2016, and at the end of last year this took the total number of listings on the BSX to 175. And this figure has also increased, with the BSX reporting that 218 ILS listings are now listed on the exchange, as at June 30^th, 2017, representing growth of roughly 25% in six months.

The record 218 ILS listings on the BSX include catastrophe bonds, private catastrophe bonds or cat bond lites, other private ILS, collateralised reinsurance sidecars, and also two listed reinsurance-linked investment funds.

CEO of the BSX Greg Wojciechowski commented on this growth; “The rapid pace of catastrophe bond issuance and use of ILS capacity in 2017 has helped to stimulate further interest in the BSX as a home for listed insurance securities. BSX ILS listings are tracking the market issuance momentum so far this year, which we are delighted about and grateful to the market for.”

As shown by the Artemis Deal Directory and Artemis Q2 2017 Catastrophe Bond & ILS Market Report, 2017 has been a very strong and impressive year for ILS issuance. $7 billion of second-quarter cat bond and ILS issuance combined with a record-breaking first-quarter to bring $9.761 billion of H1 issuance, taking the outstanding market to $29.3 billion as at June 30^th, 2017, the highest ever recorded.

The global reinsurance market remains under significant pressure and with pricing expected to fall further in the coming months and with competition showing little sign of reducing, the challenging times are likely to persist.

Furthermore, recent industry discussions around the mid-year renewals noted that ILS and collateralised reinsurance markets continue to increase their share of the overall reinsurance market pie, which is contributing to further price declines, especially in the property catastrophe space.

But despite intense competition and a notable dip in the returns of catastrophe bond and ILS business, which is facing many of the same headwinds as the traditional reinsurance sector, investors and sponsors appear as comfortable as ever with the asset class, underlined by the busy start to the year for the cat bond market and the continued expansion of the broader ILS market.

As the ILS market continues to expand its remit Bermuda is clearly benefitting from its ability and position as a global ILS domicile, attracting new vehicles and capacity. It will be interesting to see if the strong growth trend witnessed in the opening half of the year persists, and just how many ILS listings exist on the BSX, and the volume this represents, at the end of 2017, which is already a record-breaking year for cat bond and ILS issuance.

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