New cedents continued to enter the catastrophe bond space in 2014. Seven new sponsors (American Strategic Insurance Group, Everest Re, Generali, Great American, Heritage, Sompo Japan Nipponkoa and Texas Windstorm Insurance Association) utilized the 144A catastrophe bond market for the first time in the first half of 2014. Additionally, several new sponsors entered the private catastrophe bond market. They included, but were not limited to, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and Achmea.
Cedents are increasingly attracted to capital markets capacity because of its competitive pricing and broadening indemnity coverage (with increasing inclusion of non-modeled perils). As the focus grows on increased integration and consistency in coverage provided across products, GC Securities has seen a growing request for incorporating certain terms and conditions, for example, hours clauses and definitions of named storms, from capital markets structures into traditional reinsurance placements. Historically, capital markets-based risk transfer structures have been pushed to mirror traditional reinsurance terms. The decoupling of pricing and terms and conditions is a key attribute of capital markets-based risk transfer capacity relative to traditional reinsurance.
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