Investment - Articles - Non-life catastrophe bond issuance hits $2.8 billion

 Three out of the six catastrophe bond sponsors were new issuers: Security First, United Insurance and Credit Suisse. Repeat sponsors included well-known market participants such as USAA and Munich Re, as well as Allianz Risk Transfer.

 Bill Dubinsky, Head of Insurance-Linked Securities (ILS) at WCMA, said: “Despite the strong Q1 2016 issuance, second-quarter take up has not been as fervent compared to previous years. However, sponsors continue to engage with ILS investors through various other products. Decreased outstanding volume created tighter risk spreads in Q2 for this type of ILS and better relative value for ceding companies verses private deals. We expect this relative value gap to drive increased issuance of liquid ILS in response in the coming quarters.

 “With hurricane season now underway, combined with the expectation that 2016 will be a La Niña year, there is unshakeable sentiment among quite a few involved in this year’s June and July 1 U.S. property catastrophe renewals that reinsurers and ILS investors will both take significant cat losses. What happens next if this comes to pass depends upon whom you ask, but we expect capital will rush into the market post the next event. The historic pricing cycle will not disappear altogether but temporary capacity shortages and payback will significantly reduce impact compared to the past.”

 The Q2 2016 WCMA report also includes an interview with James Vickers, Chairman of Willis Re International. He provides his views on the role of capital markets in reinsurance placements outside of North America, trends in catastrophe bond issuance globally and how the reinsurance intermediary role is evolving as the ILS market develops.

 For more detail and to access the full WCMA ILS Market Update report, please click here