By: Morton N. Lane, President; Roger G. Beckwith, Vice President

The twelve months to Q1 2008 (our typical analysis period) has seen more than $7.3 billion new ILS come to market. This is a record. One senses that the ILS market is now an established part of the reinsurance and retrocessional scene to be used by insurers and reinsurers alike as tools in their risk management deliberations. Indeed, as the ILS tool was taken up more and more in the current climate, some tools were used less. For example, sidecars, one of the 2006-2007 tools de jour, dropped in use. New equity issue and new company listings, also tools de jour in 2006 and 2007, were replaced by share buy-backs in 2008. Evidently the capital cycle has turned. Next we might see acquisition and consolidation. The hard market of 2006-2007 has given way to a softer 2008. This is seen directly in prices of new ILS, a subject we turn to in greater detail below, but it is also seen in structures of the ILS being issued.

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