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ILS market issuance & innovation to continue in 2018: Appleby


There is an expectation that the insurance-linked securities (ILS) market will continue to see a brisk pace of issuance, with the volumes of transactions coming to market stimulated not just by demand but also by the innovative nature of the marketplace and 2018 looks bright, according to law firm Appleby.

In 2017 the Appleby insurance and reinsurance team in Bermuda acted on the majority of ILS transactions during the year in some capacity.

The firm said that it had a hand in bringing more than two-thirds of ILS deals based in Bermuda to market in 2017 and over half of the global ILS transactions seen during the year.

2017 saw record catastrophe bond issuance and the rest of the ILS and collateralised reinsurance market reach a record size.

Appleby said that during 2017 the firm worked on, “Some of the highest value and innovative catastrophe bonds issued during 2017, including new and repeat issuers as well as collateralised reinsurance (or “cat bond lite”) structures.”

Brad Adderley, Corporate Partner in Appleby’s Bermuda office, commented on the law firms year to Artemis, “2017 was a very interesting year in the collateralised market as we saw a variety of collateralised products. Not only did we see the usual CAT bonds from new and existing sponsors, we saw CAT bond lites, sidecars and the creation of collateralised platforms.”

Looking ahead Adderley said that more of the same was expected and the market would continue to expand.

“Going forward we expect to see takedowns from existing structures, new issuances and more entrants dipping their toes into the collateralised market by investing through collateralised platforms,” he explained.

Additionally, Adderley expects the ILS market will continue to innovate, with new structures and business strategies that should result in more market growth and opportunity for the ILS investor base.

Adderley continued, “2017 saw the continued maturation of the collateralised market with collateralised vehicles obtaining ratings. We expect this to continue in 2018 along with additional vehicles obtaining ratings and starting to write reinsurance business on a leveraged basis.”

Legal expertise plays a key role in ILS market developments and it will be interesting to see what 2018 brings, as the market gains greater influence in global insurance and reinsurance.

Register today for ILS NYC 2023, our next insurance-linked securities (ILS) market conference. Held in New York City, February 10th, 2023.

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