Archive for the ‘Capital Markets’ Category



March 19th, 2014

Increasing External Demands Compel Companies to Improve Risk Management Disclosures

Posted at 11:30 PM ET

Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review that provides an in-depth analysis of risk management practices and policies of 67 insurance and reinsurance companies located in Europe, United States, Bermuda, and Asia-Pacific. Based on publicly-available data from financial and risk reports, Guy Carpenter’s ERM Benchmark Review reveals that most (re)insurers are managing capital with metric-based frameworks and are publishing more about their risk management targets than seen in Guy Carpenter’s 2009 analysis. Capital market, legislative, and regulatory influences, such as the approaching implementation of Solvency II, are expected to further compel company managements to better recognize and analyze the risks of their enterprises.

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March 17th, 2014

Chart: Risk Capital Issued by Quarter

Posted at 1:00 AM ET

Property/casualty catastrophe bonds issuance in the period 1997 to 2013.

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March 13th, 2014

Catastrophe Bond Outlook for 2014

Posted at 1:00 AM ET

The growing influence of alternative markets capacity is pressuring traditional reinsurers’ business model and challenging them to compete against a model with lower-cost of capital that continues to enter the reinsurance market. Most reinsurance companies have responded to the challenge by leveraging their incumbent status on reinsurance programs, offering similar or better terms and similar or reduced pricing. Particularly, traditional players are emphasizing their ability to efficiently provide reinstatements, which are seen by many as a critical part of core reinsurance programs, particularly for working reinsurance layers. Traditional players are also hedging their bets and creating their own capital markets divisions to attract, manage and utilize capital from third-party sources whether in the form of fund management, managed accounts or sidecars. This will allow reinsurers the opportunity to securitize the most capital-intensive parts of the business while providing valuable cost-efficient capacity in other business lines.

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March 12th, 2014

GC Securities* Completes Catastrophe Bond Queen Street IX Re Limited for Munich Re

Posted at 5:00 AM ET

GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of the Principal At-Risk Notes, with notional principal of $100,000,000, through a newly formed catastrophe bond, Queen Street IX Re Limited, to benefit Munich Re. This is the ninth Queen Street cat bond to benefit Munich Re, the eighth overall cat bond issuance benefitting Munich Re since 2011 and the first cat bond issuance benefitting Munich Re provided via an Irish special purpose reinsurance vehicle.

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March 12th, 2014

Catastrophe Bonds 4th Quarter 2013, Maturities and Risk Capital

Posted at 1:00 AM ET

Catastrophe bond issuance in the fourth quarter of 2013, USD1.82 billion, was minimally offset by the limited amount of catastrophe bond maturities of USD360 million, resulting in a net change of risk capital outstanding of USD1.46 billion.

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March 11th, 2014

Catastrophe Bond 4th Quarter 2013 Issuance Activity

Posted at 1:00 AM ET

Fourth quarter activity began on October 15, 2013 with AXA returning to the catastrophe bond market to issue Calypso II. At the end of October, Catlin issued Galileo Re, their first transaction since 2008. November saw no sponsors come to market. Then there was a flurry of activity in December starting with USAA and AIG both returning to the market for a second time in 2013 with Residential Re 2013-2 and Tradewynd Re 2013-2, respectively. Residential Re 2013-2 Class 1 Notes carried an expected loss of 14.23 percent, making it the second riskiest tranche issued of all time in the 144A catastrophe bond market (the riskiest being Successor I Class B-II issued in 2008 benefiting Swiss Re with an expected loss of 14.73 percent).

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March 10th, 2014

Catastrophe Bond Update, Fourth Quarter 2013

Posted at 1:00 AM ET

Influence from direct capital markets’ participation in reinsurance programs, coupled with catastrophic insured losses well below historical averages in 2013, put significant pressure on global catastrophic reinsurance pricing. As a result of significantly reduced pricing (relative to recent years), approximately USD7.1 billion worth of new property/casualty (P&C) catastrophe bonds were issued in 2013 - the second largest record year for P&C issuance. The year included seven new sponsors - American Coastal, American Modern, AXIS Capital, the Metropolitan Transportation Authority (MTA), QBE, Renaissance Re and the Turkish Catastrophe Insurance Pool - who collectively secured USD1.46 billion of catastrophe bond capacity. In addition to new sponsors, another prevalent change in the market was the increasing use and acceptance of indemnity-based triggers. Given that spreads have tightened between indemnity and other trigger types, sponsors were inclined to take advantage of investors’ openness to indemnity triggers to reduce coverage basis risk without a material increase in pricing relative to non-indemnity trigger pricing.

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March 5th, 2014

Chart: 2013 Catastrophe Bond Transactions

Posted at 1:00 AM ET

This table lists the 144A property/casualty catastrophe bond transactions that were completed in 2013.

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March 3rd, 2014

Chart: Risk Capital Outstanding

Posted at 1:00 AM ET

Risk capital outstanding for property/casualty catastrophe bonds for the period 1997 to 2013. 

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February 26th, 2014

2013 Closes with Near Record Catastrophe Bond Issuance According to GC Securities*

Posted at 11:30 PM ET

GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member of FINRA/SIPC, today released an analysis of activity and trends within the catastrophe risk market from the fourth quarter of 2013, also including the outlook for 2014. According to the report, influence from direct capital markets’ participation in reinsurance programs, coupled with catastrophic insured losses well below historical averages in 2013, put significant pressure on global catastrophic reinsurance pricing. As a result of significantly reduced pricing, relative to recent years, approximately $7.1 billion worth of new property and casualty (P&C) catastrophe bonds were issued in 2013 - the second highest  record year for P&C issuance.

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