Seven bonds in Q3 2013 contributed to the highest catastrophe bond issuance in 15 years. Willis Capital Markets & Advisory, part of Willis Group Holdings, the global risk advisor, insurance and reinsurance broker, reports $1.4 billion of non-life catastrophe bond capacity were issued for the quarter, an increase from third quarter 2012 ($0.5 billion issued through three bonds).
Third quarter 2013 catastrophe bond issuance was approximately three times higher than the five-year average and was the highest on record since 1998, according to Willis Capital Markets & Advisory’s (WCMA) latest “Insurance Linked Securities” (ILS) report.
“If fourth quarter issuance remains at a similar level to that of recent years it will be a record year for ILS issuance, surpassing the 2007 record,” said Bill Dubinsky, head of ILS at WCMA. “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.”
The seven bonds in the third quarter came from AIG, AXIS, First Mutual Transportation Assurance, Groupama, RenaissanceRe, Swiss Re and Zenkyoren.
“Some investors are encouraging more catastrophe bond issuance so that they can continue to fulfil mandates for liquid investments,” Dubinsky said. “Other investors are chasing the illiquidity in collateralized reinsurance as a mechanism to protect themselves from the ruthless price pressure in a well-run syndication process.”
The full report, in PDF form, can be found here.
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