Posts Tagged ‘catastrophe bonds’
Disruptive Forces to M&A Activity: Alternative Capital Directly Supporting Increased Market Competition
The flow of alternative capital into the reinsurance markets has been sustained and substantial. The growth of this capital, coming from a number of sources, including fund managers and sidecars, has been a staggering 22 percent - compounding since 2008 and accelerating to 34 percent during the period 2012 to 2014. There was a consequent rate softening, mostly felt within the reinsurance landscape, particularly in short tail lines. The softening then trickled down into the specialty insurance classes.
Fiscal constraints are increasing across many developed and emerging economies amid growing catastrophic loss potential brought on by the geopolitical climate, demographic trends and global climate change. As a result, heads of government, international trade organizations and private sector risk bearers are increasing their calls to reexamine the roles and responsibilities of society to better manage these complicated risks.
Challenging market conditions due to abundant capacity, the ongoing influx of new capital and limited loss experience, continue to put pressure on the reinsurance sector, while recent M&A activity is adding a new dynamic to the mix. This is according to the panel of speakers at the eighth annual press briefing held at the Reinsurance Rendez-Vous 2015 in Monte Carlo, by Guy Carpenter & Company, LLC, a leading global risk and reinsurance specialist and a wholly owned subsidiary of Marsh & McLennan Companies.
Guy Carpenter’s estimate of dedicated reinsurance sector capital as of July 1, 2015 was again produced through our work with A.M. Best. Our estimate is not a simple aggregation of the capital of all companies that write reinsurance since some capital is allocated to the insurance business or other outside interests. In fact, we have seen increased evidence that some companies are shifting capital toward insurance lines and away from reinsurance lines based on the current rate environment. A.M. Best and Guy Carpenter have estimated the amount of capital dedicated to writing reinsurance by reviewing A.M. Best’s proprietary capital model (BCAR) results as well as line of business allocations. Our current estimate of total capital dedicated to reinsurance is approximately USD 400 billion of which the convergence capital, including catastrophe bonds, industry loss warranties (ILWs), collateralized reinsurance and sidecars is USD 66 billion.
GC Securities* Report Shows Healthy Catastrophe Bond Activity Supported by Record Issuance of Private Bonds
GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today released a briefing and analysis of catastrophe bond activity for the second quarter of 2015, which shows healthy activity across the market and primary issuance levels recorded as the fourth highest second quarter on record.
GC Securities* Completes Catastrophe Bond Bosphorus Ltd. Series 2015-1 Notes Benefiting the Turkish Catastrophe Insurance Pool
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 Series 2015-1 Notes, with notional principal of USD 100,000,000, through the newly formed catastrophe bond shelf program, Bosphorus Ltd., to benefit the Turkish Catastrophe Insurance Pool (TCIP). The 2015-1 Notes represent the second time that TCIP has utilized the capital markets to obtain earthquake protection on a parametric basis. TCIP, managed by Eureko Sigorta A.Ş., first accessed the cat bond market in 2013 via the issuance of Bosphorus 1 Re Ltd. and has now sourced USD 500 million in total of catastrophe bond capacity from capital market investors.
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”).