December 29th, 2014

Capital Markets Capacity: Growth Dominates in 2014: Part II

Posted at 1:00 AM ET

Capacity outstanding and size of the overall global property catastrophe limit continued to expand for all forms of capital markets capacity (144A catastrophe bonds, private catastrophe bonds, collateralized reinsurance and sidecars).

However, as capital continues to inflow from an ever broadening investor base, including pension funds, endowments, sovereign wealth funds and asset managers, the most notable development in 2014 is the expansion and diversification of how this capital is sourcing the (re)insurance risk.

The highest six month issuance of 144A catastrophe bonds occurred in the first half of 2014, setting a record of USD5.7 billion, while the risk capital outstanding grew to an unprecedented approximately USD20 billion. The figure below tracks this dynamic growth. These trends are expected to continue for the full year 2014. Additionally, the outstanding amount of capacity (as of August 8, 2014) provided in 144A catastrophe bonds has reached a record high. In sum, the 144A catastrophe bond market, mirroring the other types of capital markets-based risk transfer capacity, continues remarkable overall growth.

All Charts_June Renewal 2014

Link to Part I>>

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