Insurance-linked securities (ILS) and catastrophe bond issuance diversification was evident throughout 2016, a year that saw the percentage of U.S. wind issuance reduce substantially from the previous year, according to Munich Re.
According to reinsurance giant Munich Re’s data ILS issuance in 2016 totalled $6.7 billion, and was driven in part by increased investor and sponsor appetite for diversification in the market.
In its Q4 2016 ILS Market Report, the Germany-domiciled reinsurance giant highlights strong ILS market diversification, along with a notable reduction in the percentage of U.S. wind transactions.
“Diversification in the market was mainly spurred by an increase in Japan Wind/Quake exposure, particularly via two transactions – Aozora Re 2016 and Nakama Re 2016 (in Q2 and Q3), and an overall lower share of US wind issuance,” said Munich Re.
Apart from the reduction in U.S. wind and the heightened volume of Japanese exposures seen in 2016, Munich Re highlights further diversification in non-catastrophe-related deals and innovative ILS structures.
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