Insurance linked securitisation is attracting increasing interest from potential issuers and structurers as more companies begin to ponder transferring their risks to the capital markets, says Fitch Ratings.
Companies with Solvency II on their mind are looking to methods such as catastrophe bonds to help them adapt to the new capital requirements and manage their capital more effectively. Insurance linked securitisation (ILS) is seen as an opportunity due to the way it allows management of capital efficiency, it also addresses any concerns around diversification of risks (which is always a good thing to help capital management).
ILS will also provide opportunities to parties in search of new business in the current structured finance context. Fitch understands that a number of arrangers are intent on developing expertise in this asset class. In fact, because the investor base for these products is different to that of traditional structured finance products, the agency understands that these transactions have a higher probability of being placed in the market.
Further capital markets research and rating information can be found at Fitch Ratings.