Alternative reinsurance capital levels, mainly from insurance-linked securities (ILS), continued to rebound in the fourth-quarter of 2020, including $2 billion to end the year at $94 billion, according to the current information from broker Aon.When Aon last reported on global reinsurance capital levels, the brokers analysis revealed that alternative capital, so the capital provided by insurance-linked securities (ILS) funds and structures, as well as in instruments such as disaster bonds, collateralized reinsurance vehicles and sidecars, had begun to recover and included $1 billion in the third-quarter to reach $92 billion.
Now, upgraded information from Aon shows that alternative reinsurance capital grew even more towards completion of in 2015, including another $2 billion to reach $94 billion simply in the fourth-quarter of 2020.
In general, worldwide reinsurance capital reached a brand-new high at the end of 2020, increasing by 4% to $650 billion, all of which growth was in the fourth-quarter according to Aons information.
Standard reinsurance capital blazed a trail, increasing by 5% to $556 billion across the full-year 2020, the majority of which was in Q4.
Alternative capital, or ILS capital, is in fact down year-on-year, having fallen from $95 billion at the end of 2019, to $94 billion at the end of 2020.
That does not portray the healing seen in the second-half of 2020, as alternative reinsurance capital in fact grew by $1 billion throughout the third-quarter to reach $92 billion and then by another $2 billion, or 2%, to $94 billion by the end of the year.
Which indicates ILS capital in the global reinsurance market has actually increased by 3% given that the mid-year of 2020.
Aon noted that the funds really available for deployment in the ILS fund and alternative capital sector stays somewhat below the headline figure, as caught security concerns remain after current years of catastrophe losses.
A lot of the growth in alternative capital seen in late 2020 will have seen catastrophe bond fund supervisors the recipients, as financiers sought to take in the high levels of issuance seen.
In 2021 we think the headline figure may have risen a little more, provided continued strong need for feline bond investments, along with some small capital raises at personal ILS funds.