This is destined to be a record year for insurance-linked securities issuance — despite a relatively quiet third quarter, according to Willis Capital Markets and Advisory.

The global risk adviser, insurance and reinsurance broker, said only one ILS transaction came to market during the July through September period — the Golden State Re II deal, covering workers’ compensation risk against earthquakes.

In the third quarter of last year, $1.4 billion of catastrophe bonds were issued.

However WCMA says the market remains on track to break the full-year record set in 2007, of more than $7 billion.

WCMA chief executive officer Tony Ursano said: “Q3 followed a robust issuance season with new capital having already been deployed. It will only take about $1.2 billion more in 2014 to break 2007’s non-life ILS issuance record, so we believe this is incredibly likely.”

Bill Dubinsky, Head of ILS, WCMA, said: “Alternative capacity is becoming an integral component of sponsors’ risk transfer strategies, and ILS is being fully integrated into reinsurance purchase decisions. A quiet Q3 was not surprising. 2014 is still on track to be a record breaking year and we maintain our prediction of a final tally between $8 and $9 billion of non-life ILS issuance.

“But the actual number is not the key point here. More interesting is the broader participation of investors in sidecars, cat bonds, and collateralised reinsurance, which continues to grow.”

The report also highlights that deals have become more diversified, with more individualised approaches to positioning ILS capacity in existing reinsurance structures. This indicates that ILS has broader potential application than many previously thought and hints at continued market growth.