Succession of large losses a major test for ILS
Friday, 06 16 2017, Category: Insurance and Reinsurance, Country: World
The abundance of capacity in the global reinsurance sector from both traditional and alternative sources suggests it might take a number of large events in succession to materially turn pricing, which J.P. Morgan says would be a test for the insurance-linked securities (ILS) space.
The lack of large losses witnessed in the reinsurance industry in recent times coupled with the oversupply of capacity are the two main drivers of falling rates in the industry, says J.P. Morgan.
As a result, the volume of available reinsurance capital has reached a record high nearing $600 billion, while alternative reinsurance capital, or ILS increased its share of the total market to $81 billion as of the end of 2016, according to Aon Benfield analysis.