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Resilience of ILS & cat bond market evident in 2017: SIFMA


The insurance-linked securities (ILS) and catastrophe bond market, as well as wider alternative reinsurance capital structures, proved themselves resilient in 2017 positioning them for further growth, according to SIFMA’s Randy Snook.

Speaking at the recent SIMFA IRLS 2018 conference in Miami, Executive Vice President for Business Policies and Practices at SIFMA, Randy Snook, explained that his organisation sees the asset class as primed for further growth, having passed the test of the 2017 catastrophes.

Snook explained, “Through the unrelenting disasters of last fall, a time which many point to as the insurance and risk-linked markets first real test, the market proved itself to be without a doubt resilient.”

Following the major loss experience, Snook highlighted the potential for further growth, saying, “If anything robust issuance forecasts that we’ve seen as of today for the coming year reiterate the strength of this market.”

SIFMA as the voice of the U.S. securities industry has been a strong advocate for the catastrophe bond and ILS market since its inception, with its annual conference a meeting place for many and a feature of the ILS market event circuit.

Snook discussed the healthy response from ILS market investors and practitioners even when the largest strong of catastrophes in many years struck in 2017.

“Secondary market trading seems to continue without indications of forced sales despite the extraordinary string of disasters in 2017 that are said to have saddled issuers and reinsurers globally with more than $135 billion of losses,” he commented.

Continuing, “While we may see some activity and some active hurricane seasons in the next few years, I know this group is competent and that the resilience and the role of the ILS market will continue to grow, with a commitment to the asset class and a focus on long-term sustainable returns and investment.”

Snook explained that the market is primed for further growth at this time, “I think all this really reinforces the desire to expand capital sources, increase diversity, increase diversity in risk and risk takers in the marketplace.”

Noting also that ILS remains a factor in how the global insurance and reinsurance market is evolving, “Pricing power and the impact of ILS and other alternative capital is a growing topic, both in terms of its capacity implications and its pricing implications.”

Snook made a commitment to the ILS market, saying that SIFMA would continue to support market growth, “At SIFMA our role is to serve the industry in the capital formation process, that includes facilitating and enhancing the process and the risk transfer.

“We support the issuance and purchase of ILS, so that issuers can better manage their risks and exposures and investors can get and achieve their desired investment and risk outcomes.

“We’re committed to making the markets more efficient and deeper.”

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