High-volume maturities coupled with a diverse and steady stream of new issuances created a dynamic market environment in the first quarter of 2015. The first quarter of each year is particularly active in terms of issuance for the property/casualty (P&C) catastrophe bond market, and this characteristic continued into 2015 as USD1.49 billion of 144A P&C catastrophe bond limit was successfully placed with investors, one of the highest first quarter volumes in the history of the 144A marketplace. However, the first quarter also had the highest ever volume of 144A P&C catastrophe bonds maturing, returning USD3.544 billion of principal to investors. As of March 31, 2015, USD20.813 billion of P&C 144A catastrophe bond risk capital was outstanding.
The pricing discipline of investors that emerged in the fourth quarter of 2014 persisted into the first quarter of 2015 as recent deal pricing and investor feedback suggests that catastrophe bond pricing reductions will be unlikely to continue in the near term, though pricing remains at the favorable rates achieved in the fourth quarter of 2014 execution. While it would be premature to conclude the market has hit a pricing floor, continually pricing at the lower end of the price guidance appears to be harder to attain than in previous years.
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