Since its inception in 1996 the insurance-linked securities market has witnessed worldwide issuance of $38bn and has more than remained stable throughout the credit crunch. According to AM Best, the catastrophe bond market grew from $1.99bn to $4.69bn between 2005 and 2006, and Swiss Re predict that the wider ILS market will follow suit by growing to $1trln over the next decade.
Regardless of the credit crunch, investors recently raced to buy a $260m catastrophe bond designed to protect East Japan Railway against earthquake damage. Rodrigo Araya of Moody’s Investors Service says, “The market has grown at a scorching pace in the last three years. We will probably see about $8bn in new issuance this year”.
Investors are attracted to ILS because they offer an investment that is not directly correlated to fluctuations in the wider financial markets. They have been largely unaffected by the collapse of the subprime markets which has allowed the ILS market to continue to grow over the summer.
With the introduction of Solvency II which will be implemented in 2012 the market will continue to grow. Talking about Solvency II, Rick Watson who is managing Director of the European Securitisation Forum said, “The new directive says that you can now use not only reinsurance but also securitisation and derivatives to mitigate liability risks for life and non-life”. The new legislation allows for insurance companies to use the transfer of risk onto the capital markets as a tool to reduce their regulatory capital requirements, which previously was not permitted. This will encourage continued rapid growth in the sector as more new risks are securitised”.
Solvency II presents insurers with a series of choices and challenges and it is crucial to prepare now in order to be among those who benefit from the new regime. Those who grasp the opportunity will gain competitive advantage over those who don’t. How to be amongst those who benefit is one of the many business critical ILS issues to be discussed at the European ILS and Cat Bond Summit 2008 which takes place on 7-8 February.
The summit agenda has been written with the input of some of the most leading authorities in ILS and will be presented by the most expert line-up of speakers to assemble in Europe to date. Speakers include Rodrigo Araya (Moody’s Investors Service), Luca Albertini (Swiss Re), Michael Pinsel (Sidley Austin), Dr Milan Simic (AIR Worldwide) and Vinay Mistry (Lloyds of London) amongst many others. Talking about the event, Luca Albertini said, “It is now the time to pause and think about what has happened and work on future issuance”.
The summit is completely independent and will make sure issuers, sponsors and investors are given a concise guide to guarantee their success and long-term competitiveness in the ILS and cat bond market. It provides a superb opportunity for you to make contact with new potential clients and solution providers, and will ensure that you are correctly positioned to benefit from the rapidly expanding ILS market.
Visit ilstoday.com to find out more about this exciting who’s who event and to find out how to qualify for a discount of up to £300 on the full price!
The European ILS and Cat Bond Summit 2008 has been organised by ILS Today. We are a new company who provide intelligence, collate news, interview the world’s leading ILS experts and organise senior level business to business events specifically for the ILS community.