The increasing influence of alternative capacity is demonstrated by the chart below, which shows the growth of convergence capacity as a percentage of global property catastrophe limit from 2008 to 2013 (projected).
The growth in the Guy Carpenter Global Reinsurance Composite is illustrated below, covering 2011 to first quarter 2013.
Tokio Solution Management Ltd. (”Tokio Solution”) and GC Securities*, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, are pleased to announce the creation and launch of a private catastrophe bond platform called the Tokio TensaiTM Platform.
GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, today announced the placement of the Series 2013-1 Notes, with notional principal of $175,000,000, through a newly formed catastrophe bond shelf program, Blue Danube II Ltd., to benefit Allianz. This is the second time that Allianz has accessed PCS-MITT triggered cat bond protection and the eighth overall cat bond issuance benefitting Allianz since 2007.
Details on each transaction completed during 2013 year to date are presented.
Total risk capital outstanding increased during the first quarter of 2013, reaching an all-time high water mark of USD15.0 billion - up from USD14.83 billion at year-end 2012, representing a net increase of 1.13 percent (USD168 million).
GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, today announced the placement of the Series 2013-1 Notes, with notional principal of $300,000,000, through an existing catastrophe bond shelf program, Long Point Re III Ltd., to benefit Travelers. This is the second time that Travelers has accessed indemnity-triggered, fully collateralized reinsurance protection from the catastrophe bond market.
Risk Capital Outstanding
Total risk capital outstanding increased during the first quarter of 2013, reaching an all-time high water mark of USD15.0 billion - up from USD14.83 billion at year-end 2012, representing a net increase of 1.13 percent (USD168 million). This is the eighth consecutive quarter of growth in risk capital outstanding. Risk capital outstanding is up more than 17 percent since the end of the first quarter of 2012.
During the first quarter of 2013 two natural peril-exposed catastrophe bond transactions closed, for a total of USD520 million of issuance (1). This seemingly low level of primary issuance activity is deceiving, however, as the action in the capital markets and the influence of “non-traditional” capacity (a term that is rapidly approaching obsolescence) has never been higher. Conservative institutional asset managers, the custodians of trillions of dollars of investable assets, have largely accepted catastrophe risk as a component of mainstream investment strategy. And, while it is the case that institutional capital’s pursuit of catastrophe risk has been aided by a low interest rate environment, short-term yield chasing is not the primary driver of the inflows. Rather, this is stable capital that has spent years evaluating the catastrophe risk asset class, looking for both steady returns and, in the aftermath of covered events, orderly payment of losses. It has been waiting to see organized secondary trading activity during live catastrophe events such as Hurricane Irene (in 2011) and, most recently, Superstorm Sandy (in 2012). On all fronts, the catastrophe risk market has demonstrated it is ready to transition from adolescence to young adulthood. The impact has been dramatic; pricing has decreased more than 50 percent year over year, particularly for peak U.S. risks such as Florida, which carry significant profit margin for the traditional reinsurance market.
Here we review recent GC Capital Ideas stories about GC Securities.
GC Securities*: First Quarter Cat Bond Activity Signals Robust Issuance Ahead: GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, today released an analysis of first quarter activity and trends within the catastrophe risk market for 2013. Two natural peril-exposed catastrophe bond transactions closed during the first quarter of 2013, for a total of USD520 million of issuance. This seemingly low level of primary issuance activity is deceiving, however, as activity in the capital markets and the influence of “non-traditional” capacity - a term that is rapidly approaching obsolescence - has never been higher.
GC Securities* Completes Catastrophe Bond Bosphorus 1 Re Ltd. Series 2013-1 Notes for the Turkish Catastrophe Insurance Pool: GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, today announced the placement of the Series 2013-1 Notes, with notional principal at $400,000,000, through a newly formed catastrophe bond shelf program, Bosphorus 1 Re Ltd., to benefit the Turkish Catastrophe Insurance Pool (TCIP). This is the first time that the TCIP has directly utilized the cat bond market to manage its earthquake risks in the Istanbul region.
Stephen C. Mathews Joins GC Securities*: Guy Carpenter announced that Stephen C. Mathews has been appointed Managing Director of GC Securities*, effective immediately. Mr. Mathews is based in New York and reports to Chris Ezbiansky, Head of M&A Advisory - Americas.
GC Securities* Completes Catastrophe Bond Tar Heel Re Ltd. Series 2013-1 Notes: GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, today announced the placement of the Series 2013-1 Notes, with notional principal at $500,000,000, through a newly formed catastrophe bond shelf program, Tar Heel Re Ltd., to benefit the North Carolina Joint Underwriting Association and the North Carolina Insurance Underwriting Association (collectively, the NCJUA/NCIUA). This is the fourth time that the NCJUA/NCIUA has utilized the cat bond market to manage its tropical cyclone risks and the first time that an annual aggregate structure was utilized.
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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/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., which is authorized and regulated by the Financial Services Authority. 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, Inc. 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.
