S&P see lack of activity in August as seasonal fluctuation

The insurance-linked securitisation (ILS) market is set to finish the year well, according to a report published today by Standard & Poor's.

"The recent lack of activity in the ILS market and disruption in the credit markets has engendered debate over the outlook for issuance throughout the rest of this year," said credit analyst Maren Josefs.

"'Although there have been no new ILS transactions since the beginning of August, we consider this in part reflects the seasonality of issuance," she continued.

Josefs noted that a more meaningful barometer for ILS is the secondary market where we are told that catastrophe bond trading has increased and spreads have tightened. This underlines the lack of default correlation these instruments have with more conventional securities.

"We consider that credit market events are unlikely to dampen ILS investor appetite and that total issuance in 2007 will be greater than in 2006," she concluded.