US insurers have minimal funding publicity to the insurance-linked securities (ILS) and disaster bond market, even supposing this asset class has seen important progress in recent times, in accordance with a brand new report by AM Greatest.
In its current Greatest’s Commentary, AM Greatest acknowledged that US investments within the ILS and disaster bond market are extremely concentrated, with solely 5 corporations accounting for 70% of trade investments. US insurers maintain about $850 million of the roughly $33 billion in excellent disaster bonds regardless of the widely larger returns these bonds supply.
The information comes as disaster bond issuance has reached file ranges.
“Issuance within the 144a disaster bond market reached a file $12.5 billion in 2021, exceeding the earlier file set in 2020 by virtually $1.5 billion,” mentioned Jason Hopper, affiliate director of trade analysis and analytics at AM Greatest. “Nonetheless, the worldwide ILS market stays saddled with prior disaster losses, and the general efficiency of ILS bonds deteriorated regardless of one other yr of file disaster bond issuance.”