December 31st, 2014

Catastrophe Bonds New Cedents

Posted at 1:00 AM ET

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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Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/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. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. 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 any offer to buy any security, financial instrument, reinsurance or insurance product. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

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