Is the music about to stop?

Artemis is reporting that the ILS/Catbond market has passed the magic $20b mark, and that $7b in new issues have been made this year.

The BSX lists $9b of the $20b, making Bermuda the leading ILS jurisidiction.

We’re told this is a good thing, even if it makes conventional (if there is such a thing) reinsurance underwriters weep as their bonuses shrivel.

But you have to wonder what happens when there’s a big catastrophe – will all this new capacity run away? Equally, the idea is that the hedge funds and pension funds buying into these vehicles are doing it for higher returns, but every time money is put in, rates decline, so what kind of returns are they actually getting? It’s all starting to feel a little overheated, isn’t it?

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One Response to Is the music about to stop?

  1. Pingback: Irrational exuberance? | Bermuda Independent

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