Issuance of insurance-linkedsecurities fell to $1.37 billion in the second quarter, compared to nearly$3.00 billion in the year-ago period and the first time below $2 billion since2011, according to Munich Re'sinsurance-linked securities market update.

Much of the substantial issuancein the second quarter of 2013 came to maturity in the same period in 2016,Munich Re noted. Capital outflows reached $1.3 billion and total outstanding capacityfell to $24 billion.

The U.S. renewal season drovesecond-quarter activity as it often has, with new issuance mainly coming fromrepeat U.S. sponsors.

Investors' exposure to a broaderrange of perils has grown in recent years, and the trend should continue,Munich Re said. While wind and earthquake risks in the U.S. remain dominant,issuance continues to broaden toward more exotic perils as dedicated ILS fundsseek diversification within the asset class.

The shift toward indemnity-basedtrigger types should also persist, as the buy-side dominance of dedicated ILSfunds and their reinsurance expertise allows insurers to offload risks tocapital markets through non-synthetic, less standardized structures, thereinsurer said.