Last year saw a record number of 29 catastrophe bond deals, according to Willis Capital Markets & Advisory.
Total issuance over the year of $7.1bn was very close to the 2007 record of $7.2bn, with non-investment grade and unrated issuance also recording a new high, according to WCMA’s latest ILS market report.
Overall outstanding capacity at year-end reached $18bn and has now grown at a compounded growth rate of 18% since 2000. The fourth quarter of 2013 saw $1.8bn of non-life catastrophe bond capacity raised in seven deals, whereas the fourth quarter of 2012 saw $1.bn.
All but one of the 2013 fourth quarter issuances were sponsored by repeat sponsors, with Queen City Re, sponsored by newcomer American Modern Insurance, being the sole exception.
Bill Dubinsky, head of ILS at WCMA, comments “2014 may prove to be a pivotal year for the cat bond and sidecar markets. On the one hand, 2013 was a banner year for cat bonds, sidecars, and collateralized reinsurance with $7.1bn 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 programmes of favoured clients.”
Tony Ursano, CEO of WCMA, comments “The reinsurance industry is in the midst of a gradual transformation as the inflows of third party capital continue to increase. 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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