Summary |
This book focuses on insurance-linked securities (ILS). This term can cover a wide range of products but all serve the same purpose: they transfer risks traditionally retained by the insurance industry into the capital markets.
The first deals that achieved this objective were completed in the first half of the 1990. Since the size of this market has slowly increased but, despite some of the sector’s earlier expectations, it is still a relatively small and immature sector given the size of the two markets this technique brings together.
On top of this, a number of break-through deals have been completed in the past 18 months. These may also move this market forward. Their structures and importance will be explored later in the book. One provides a regular stream of issuance to investors offering different types of catastrophe risk. Another offers a way for life insurance companies to transfer risk using publicly-rated deals for the first time. But to understand both this marker’s potential and the reasons for its existence in the first place, it is worth re-capping on the state of the insurance markets and the capital markets today.
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