Analysts at Fitch Ratings expect that reinsurers in the Asia Pacific market will continue to adopt alternative capital as a funding source through the insurance-linked securities (ILS) market.

The rating agency forecasts additional issuance of catastrophe bonds in the coming months after the seven that were issued using Singapore-domiciled vehicles up to July 2021.

Potential catastrophe bond issuers will likely be from countries whose reinsurers have lower profitability such as Japan and China given the urgency to lower the cost of capital. On the other hand, reinsurers in Indonesia and Korea may enter the market later.

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