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Press Release

Q3 non-life ILS capacity at near-record high of $27.3 billion

Insurance Linked Securities|Reinsurance
Insurer Solutions

November 1, 2019

The value of non-life capacity issued and outstanding at the end of the third quarter was at a near-record high of $27.3 billion, exceeded only by the year-end figure of $27.8 billion for 2018.

LONDON, 1 November 2019 — The value of non-life capacity issued and outstanding at the end of the third quarter was at a near-record high of $27.3 billion, exceeded only by the year-end figure of $27.8 billion for 2018, according to the new ILS Market Update from Willis Re Securities, part of Willis Re, the reinsurance division of Willis Towers Watson, the leading global advisory, broking and solutions company (NASDAQ:WLTW).

The ILS sector has reached a dynamic equilibrium and is well positioned for growth. Alternative capital in all its forms is clearly growing again, notwithstanding the losses and related loss creep of the past several years. This rising tide will not raise all ships, however. Some managers, sectors, and strategies have outperformed, and are now benefitting as a result, while others remain under stress. For example, capacity remains restricted for ultimate net loss (UNL) retrocession with only limited interest so far from new investors. Meanwhile reduced loss creep, higher premiums, and the associated improved risk-return profile have provided a tailwind which should prompt new issues.

William Dubinsky, Managing Director & CEO, Willis Securities, Inc., said: “The ILS market is at an important inflection point. Starting in Q4, but with more effect in 2020, we expect growth in the more liquid forms of ILS, particularly catastrophe bonds. Some investors are realigning their portfolios towards investments with lower projected losses, as they see increasing relative value at the more remote end. That could bode well for cat bonds. Sidecar interest has picked up as well, but the extent to which this interest will translate into completed deals will depend very much on the specific opportunities presented to investors. Not all deals will meet their increasingly stringent criteria.”

The complete report is available for download here.

About Willis Re

One of the world's leading reinsurance brokers, Willis Re is known for its world-class analytics capabilities, which it combines with its reinsurance expertise in a seamless, integrated offering that can help clients increase the value of their businesses. Willis Re serves the risk management and risk transfer needs of a diverse, global client base that includes all of the world's top insurance and reinsurance carriers as well as national catastrophe schemes in many countries around the world. The broker's global team of experts offers services and advice that can help clients make better reinsurance decisions and negotiate optimum terms. For more information, visit willistowerswatson.com/willisre.

About Willis Re Securities

Willis Re Securities advises insurers, reinsurers, individual insureds and selected public entities on insurance and reinsurance-related capital markets products, including insurance-linked securities (ILS) and derivatives structuring and issuance, secondary trading of ILS for clients, as well as capital raising and selected M&A advisory activities.

Willis Re Securities is a trade name used by Willis Securities, Inc., a licensed broker dealer authorized and regulated by FINRA and a member of SIPC (“WSI”) and Willis Towers Watson Securities Europe Limited (Registered number 2908053 and ARBN number 604 264 557), an investment business authorized and regulated by the UK Financial Conduct Authority and exempt from the requirement to hold an Australian Financial Services License under ASIC Class Order [03/1099] (“WTW Securities Europe”). Each of WSI and WTW Securities Europe are Willis Towers Watson companies. Securities products and services are offered through WSI and WTW Securities Europe. Reinsurance products are placed through Willis Re Inc. in the United States and Willis Limited in the UK, both also Willis Towers Watson companies.

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