Q3 2013 Sees Highest Catastrophe Bond Issuance in 15 years, says
Willis Capital Markets & Advisory
The third quarter of 2013 saw $1.4 billion of non-life catastrophe bond capacity
issued through seven bonds, in comparison with $0.5 billion issued through three
bonds in the third quarter of 2012, according to Willis Capital Markets & Advisory
(WCMA), part of Willis Group Holdings (NYSE: WSH), the global risk advisor,
insurance and reinsurance broker.
Third quarter issuance in 2013 was approximately three times higher than the five
year average and was the highest on record since 1998, according to WCMA in its
latest ‘Insurance Linked Securities’ (ILS) report.
Bill Dubinsky, Head of Insurance-Linked Securities (ILS) at WCMA, said: “As we
move into the year’s final quarter, a fourth quarter issuance level similar to that of
recent years will see the market record its largest ever issuance year, surpassing the
2007 record. Outstanding capacity has now grown in each of the past five years, with
the currently outstanding capacity of $17.3 billion, representing an all-time high.”
Elsewhere in the report, WCMA explores how some traditional reinsurers are
responding to the influx of capital into the reinsurance market, by managing
increasing amounts of investor capital in funds and sidecars, as well as sponsoring
Dubinsky added: “Some investors are encouraging more catastrophe bond issuance
so that they can continue to fulfil mandates for liquid investments. Other investors are
chasing the illiquidity in collateralised reinsurance as a mechanism to protect
themselves from the ruthless price pressure in a well run syndication process.”
The report also contains an interview with Dr Andreas Müller, Head of Distribution
and ILS investments at Munich Re’s Risk Trading Unit.
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