February 24th, 2015

Growth of Private Cat Bond Placements in 2014

Posted at 1:00 AM ET

In addition to 144A transactions, the fourth quarter was an active one for the private cat bond market (Regulation D, Regulation S and Rule (4(2)) securities offerings). The terms and conditions of such securities are typically confidential due to the private nature of the issuance, unless the sponsors or the placement agents publicize information about the transactions. As of December 31, 2014 approximately USD561.5 million of limit was transferred to the capital markets via 17 transactions. These figures represent a 210 percent increase in the notional amount of limit placed year-over-year, and a 183 percent increase in the number of transactions year-over-year.

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A notable transaction in 2014 was the CHF70 million Regulation S placement of notes through Kaith Re Ltd. to benefit Gebäudeversicherung Bern (GVB) and provide protection against Swiss natural peril. This particular transaction was unique because it was the first-ever Swiss franc-denominated cat bond and in essence achieved the same coverage terms as the traditional reinsurance used by GVB. The Kaith Re Ltd. vehicle was used on two other occasions in the fourth quarter to issue two separate series of notes.

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