May 14th, 2012

GC Securities:* Catastrophe Bond Issuance Tops USD1.3 Billion in Q1 2012

Posted at 1:00 AM ET

The first quarter of 2012 was the most active first quarter on record for the global catastrophe bond market, according to GC Securities. During the quarter, a total of USD1.34 billion of risk capital was issued through eight transactions, exceeding last year’s record of USD1.02 billion for the same time period.

In Q1 2012, GC Securities also found that:

  • Total risk capital outstanding increased by 5.2 percent from USD12.14 billion to USD12.77 billion.
  • Catastrophe bond redemptions amounted to the equivalent of USD711.3 million of risk capital.
  • Issuance was significantly more diverse than the year before, particularly in terms of types of exposure, event structure and risk/return profile.

Cory Anger, Global Head of ILS Structuring, GC Securities, said “In the first quarter of this year, sponsors sought to lock in capital markets capacity for a diverse array of perils and structures in a somewhat uncertain traditional market environment. Capital providers proved up to the task, although with some upward pressure on pricing.”

Chi Hum, Global Head of ILS Distribution, GC Securities, added, “The level of issuance achieved in the first quarter demonstrates that both protection sellers and buyers are seeing strong value in the insurance-linked securities market. Record issuance combined with new perils, structures and investors illustrate the continued growth and maturity of the catastrophe risk asset class.”

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* Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC. Main Office:  1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of an offer to buy any security, financial instrument, reinsurance or insurance product. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act.

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