September 2nd, 2015

Dynamic Cat Bond Environment in First Half of 2015

Posted at 1:00 AM ET

A high-volume of maturities coupled with a diverse and steady stream of new issuances created a dynamic catastrophe bond environment in the first six months of 2015.

The first quarter of each year is particularly active in terms of issuance for the property/casualty (P&C) catastrophe bond market. USD 1.49 billion of 144A P&C catastrophe bond limit in the First Quarter of 2015 was successfully placed with investors, which is the highest first quarter volume in history, with issuance of USD 1.49 billion. Furthermore, the highest quarterly volume of 144A P&C catastrophe bonds matured in the first quarter, returning USD 3.544 billion of principal to investors.

While the first quarter is usually quite active, the second quarter of each year typically has the highest activity in terms of issuance for the P&C catastrophe bond market. The second quarter of 2015 was no different, with USD 2.35 billion of 144A P&C catastrophe bond limit successfully placed with investors. Furthermore, the quarterly volume of 144A P&C catastrophe bonds maturing in the second quarter returned USD 1.606 billion of principal to investors.

The combined maturities in First Quarter and Second Quarter 2015 are the highest volume of 144A P&C catastrophe bonds to mature in the first half of the year. As of July 1, 2015, USD 21.559 billion of P&C 144A catastrophe bond risk capital was outstanding.

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New Issuances in Review (Repeat Issuers)

Fourteen repeat sponsors re-entered the market in the five months ending May 31, each issuing either replacement coverage or additional limit in advance of the North Atlantic wind season. Many of the repeat sponsors sought to continue to take advantage of attractive pricing.

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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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