Guy Carpenter today released its 2015 Mid-Year Report on the (re)insurance landscape. In addition to providing a brief recap of renewal activity highlighted in their release on July 9, the report assesses key industry trends, including a detailed assessment of mergers and acquisitions activity and highlights other notable themes such as cyber security risk, increased regulation and public-private partnerships.
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GC Securities* Completes Catastrophe Bond Panda Re Ltd. Series 2015-1 Notes Benefiting China Property & Casualty Reinsurance Company Ltd. and China Reinsurance (Group) Corporation
GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of Series 2015-1 Class A Principal At-Risk Variable Rate Notes due July 9, 2018, with notional principal of USD 50,000,000, through a newly formed catastrophe bond shelf program, Panda Re Ltd., to benefit the China Property & Casualty Reinsurance Company Ltd. and China Reinsurance (Group) Corporation (collectively “China Re”).
Here we present GC Capital Ideas’ stories on analyses of enterprise risk management disclosures. A 2014 study updated the analysis done in 2009, one of our most popular stories. The full briefings are attached.
The private catastrophe bond market continues to grow steadily in 2015, with USD196.7 million of limit placed in rule 4(2) private placement format via six transactions through March 31, 2015. The 2015 year-to-date volume (through March 31, 2015) has exceeded the total full-year issuance in the individual years 2011, 2012 and 2013. Total year-end issuance in 2014 was USD561.5 million across 17 transactions. As the industry continues to develop and enhance platforms to facilitate issuance of smaller catastrophe bonds, it is likely the market will continue to see further issuance in such a format over 2015.
In a promising sign for the 144A P&C catastrophe bond market, one new issuer successfully obtained capital markets protection during the first quarter. Safepoint Insurance Company, seeking to establish long-term relationships with alternative capital providers, issued USD100 million of Principal At-Risk Variable Rate Notes via a newly established catastrophe bond shelf program, Manatee Re Ltd. Series 2015-1. As the deal upsized from USD75 million, the insurance-linked securities investor base accommodated the growing Florida insurer, clearly demonstrating investors’ willingness to assume risk from start-up and/or growing insurance companies seeking protection in 144A bond format.
Six repeat sponsors re-entered the market in the three months ending March 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 as demonstrated by Catlin’s Galileo Re Ltd. Series 2015-1 Notes. This particular transaction was Catlin’s second catastrophe bond issuance through the Galileo Re Ltd. catastrophe bond facility and fifth overall 144A catastrophe bond issuance, with the 2015-1 tranche sitting below the outstanding Series 2013-1 layer. The 2015-1 Notes demonstrate that investors continue to show an interest in high risk/higher yielding products as the initial risk interest spread on the Galileo Re Series 2015-1 Notes is 13.50 percent with a modeled annual expected loss of 8.60 percent on a sensitivity basis - based on AIR risk analysis.
Chart presents the 144A P&C catastrophe bond issuance from 1998 through the first quarter of 2015. The first quarter is particularly active in terms of issuance for the P&C cat bond market and this characteristic continued into 2015 as USD1.49 billion of 144A P&C cat bond limit was successfully placed with investors, the highest first quarter volume in history.
Here we review the evolving role of reinsurance in mitigating public sector risk through the expanding deployment of reinsurance and capital market solutions:
GC Securities* Completes Catastrophe Bond Alamo Re Ltd. Series 2015-1 Notes for the State of Texas’s Windpool
GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, announced the placement of the Series 2015-1 Notes, with notional principal of USD 700,000,000, through the existing catastrophe bond shelf program, Alamo Re Ltd., to benefit the Texas Windstorm Insurance Association (TWIA). This is the largest 144A catastrophe bond completed to date in 2015 and the second time that TWIA has utilized the cat bond market to manage its tropical cyclone risks.