General Insurance Article - Largest ever quarter for non-life cat bonds says Willis


 The largest ever volume of non-life catastrophe bonds was issued during the second quarter of 2014, according to a report by Willis Capital Markets & Advisory (WCMA), part of Willis Group Holdings.

 WCMA’s latest insurance-linked securities market update, published this week, found that in Q2, $4.5bn of non-life catastrophe bond capacity was issued in 17 deals, compared with $3.3bn issued in 17 deals in the same quarter of last year. This beats the previous quarterly record of $3.5bn of non-life catastrophe bond capacity issued in Q2 2007.

 The report noted that the record issuance was driven by two of the largest ever catastrophe bond transactions; Everglades Re 2014, a $1.5bn bond for Florida Citizens and two Sanders Re 2014 takedowns totalling $950m in new capacity for Allstate.

 Tony Ursano, ceo of WCMA, comments “In Q2, the ILS market continued to evolve, progressing its gradual transition from a niche and emerging market into a more mainstream alternative asset class.

 Not only did we see the largest ever single transaction cat bond in Q2, but we also witnessed several other notable achievements including the first indemnity-trigger cat bond for a primary company’s Euro Wind exposure, the first yen-dominated deal, as well as the fastest ever takedown.”

 The report also found that individual insureds, or large corporates, have not yet joined the market to the extent expected following the 2013 MetroCat deal and the declining spreads of the last year.

 “Risk managers often prefer an indemnity trigger, which some brokers view as tricky to achieve for an individual insured. Additionally, many risk managers and brokers lack access to the modelling information necessary to provide price indications. Nonetheless, given the continued interest, we still expect some of these deals to eventually reach the market,” Bill Dubinsky, head of ILS at WCMA said.

 Commenting on the outlook for the remainder of the year, Ursano said “While we expect Q3 to be relatively quiet, Q4 should be busy even if spreads remain flat or have a slight uptick against the back drop of a loss free third quarter.

 Given the spread environment and the busy second quarter, we feel optimistic that 2014 will end up a record setting year for the cat bond market. By year end, we expect eight to nine billion dollars in total non-life cat bond issuance, whilst the broader ILS market, including private deals and deals with coverage extending beyond property cat, should exceed this considerably.” 

Back to Index


Similar News to this Story

Sleighing the risks by giving Santa the insurance he needs
While you might be the most magical employer in the world, we know that even you aren’t immune to the risks of running a global delivery service! From
Diversity improving in insurance and long term savings
Key figures from the Association of British Insurers’ latest Diversity, Equity and Inclusion (DEI) data collection highlight the work of insurers and
Almost a third of homeowners have been victims of burglaries
Research commissioned by Co-op Insurance reveals that almost one in three (29%) homeowners have been the victims of theft from their home. The member-

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.