The growth in convergence capital has resulted in ILS catastrophe risk pricing decoupling from price expectations in the traditional reinsurance market, with some ILS products now offering the most competitive terms for reinsurance buyers. Strong appetite for U.S. hurricane catastrophe bonds, for example, has tightened spreads in the secondary market by an average of approximately 45 percent on a weighted notional basis since issuance in 2012. Despite the significant decrease in ILS pricing over the last 12 months, investor demand continues to be robust. Indeed, projections by GC Securities indicate that the catastrophe bond market alone could reach USD23 billion by the end of 2016.
Posts Tagged ‘catastrophe bonds’
The sector has seen robust catastrophe bond, structured ILW s and collateralized reinsurance activity throughout the last 18 months. In total, around USD10 billion of new capital has entered the global market in these various forms over this period. This segment of the reinsurance market now accounts for an estimated USD45 billion of capacity, approximately 14 percent of global property catastrophe limit purchased, and the penetration of this capacity is growing.
Guy Carpenter is pleased to present our mid-year report on the reinsurance market at a time of dynamic capital growth in the sector. The reinsurance marketplace has undergone significant change since early 2012 as investors continue to supply capacity through a convergence of alternative and traditional vehicles. This new supply has changed the nature of the sector’s capital structure. It has also exerted downward pressure on reinsurance pricing, thereby delivering a more cost efficient source of risk transfer.
Guy Carpenter released its mid-year market report, highlighting a time of dynamic capital growth in the reinsurance industry. As investors supply capacity through a convergence of alternative and traditional vehicles, the report details the ways in which this new supply of capital and excess capacity has changed the nature of the sector’s capital structure.
In its sixth annual press briefing held at the Reinsurance Rendez-Vous 2013 in Monte Carlo, Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist and member of Marsh & McLennan Companies (NYSE: MMC), considered the impact of new capacity on current market conditions and explored where the opportunities exist for profitable growth in such an environment.
Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist and member of Marsh & McLennan Companies (NYSE: MMC), reports that reinsurance market rates on line (ROLs) continued to be driven by an influx of capital from third-party investors at the July 1 renewals, in spite of catastrophe losses reaching approximately USD20 billion during the first six months of 2013 (above the ten-year average for the period). In a briefing released today, Guy Carpenter comments that robust catastrophe bond, sidecar and collateralized reinsurance activity throughout the year has for the first time pushed pricing in the capital markets to “decouple” or breakaway from levels set by the traditional market. This has in turn prompted downward pressure on overall traditional market pricing.
GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC, today announced the placement of the Principal At-Risk Notes, with notional principal of $75,000,000, through a newly formed catastrophe bond, Queen Street Re VIII Limited, to benefit Munich Re. This is the eighth Queen Street cat bond to benefit Munich Re and the seventh overall cat bond issuance benefitting Munich Re since 2011.
Here we review recent GC Capital Ideas stories that have reported catastrophe bond transactions in which GC Securities was involved.
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.