Analysis

ILS capacity in the form of retained earnings and new inflows is shaping up to meet growing demand for reinsurance and retro coverage.

The broker studied the impact of 14 major cyber events in its attempt to dispel ILS manager fears of a ‘double whammy’ cyber event that would also impact financial markets.

The supply-demand dynamics are all pointing in ILS markets’ favour, so long as hurricane season goes quietly.

The ratings agency has said ILS firms could encounter “pent-up demand” from cedants during the January 2024 renewal.

Hurricane Idalia is still live, but the storm’s track reassured market participants that it will be a relatively minor loss.

If the assets of the cell form part of the Vesttoo estate, this may impact the priority of returning associated capital to cedants.

Total reinsurance capital will climb to $560bn, ahead of last year but behind the 2021 peak of $570bn.

The industry’s ability to draw new capital will hinge on the outcome of the Atlantic hurricane season.

Loss estimates from Aon, Gallagher Re, Swiss Re and Munich Re all point to a significant component of severe convective storm losses.

Most forecasters now predict above-average storm activity for the Atlantic as a result of record-high sea-surface temperatures.

At least six aggregate bonds offering convective storm cover have been marked down by around an average of more than 20% on the secondary market.

Risers and fallers emerge within peer group of larger ILS firms, with Twelve Capital and Pillar the fastest growing in H1.