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Record high number of cat bond deals in 2013: Willis Capital Markets


January 31, 2014   by Canadian Underwriter


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Last year saw a record number of catastrophe bond deals, Willis Capital Markets & Advisory (WCMA), the capital markets division of Willis Group Holdings, said this week.

There were 29 cat bond deals in 2013, with total issuance over the year reaching  $7.1 billion.

That was close to the 2007 record of $7.2 billion, with non-investment grade and unrated issuance also recording a new high, according to WCMA’s latest ILS market report.

Overall outstanding capacity at the end of the year reached $18 billion and has now grown at a compounded growth rate of 18% since 2000, according to WCMA.

The fourth quarter of 2013 saw $1.8 billion of non-life catastrophe bond capacity raised in seven deals, while the comparable quarter of 2012 saw $1.9 billion issued in seven deals. All of the 2013 fourth quarter issuances were sponsored by repeat sponsors, except for Queen City Re, sponsored by newcomer American Modern Insurance, WCMA said.

“2013 may prove to be a pivotal year for the cat bond and sidecar markets,” Bill Dubinsky, head of ILS at WCMA commented in a press release.

“On the one hand, 2013 was a banner year for cat bonds, sidecars, and collateralized reinsurance with $7.1 billion in non-life cat bond issuance and considerable sidecar activity despite the softening market conditions.

“On the other hand, traditional reinsurers are reacting aggressively to maintain market share by launching preemptive quotes to defend previously unassailable positions on the programs of favored clients.”

“The reinsurance industry is in the midst of a gradual transformation as the inflows of third party capital continue to increase,” Tony Ursano, CEO of WCMA, added in the statement. “We expect that 2014 will be marked by innovation, seeing new sponsors, new perils and new structures come to market in an effort to meet investors demand for risk.”


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