Last year saw a record number of 29 catastrophe bond deals, according to Willis Capital Markets & Advisory (WCMA).
Total issuance over the year of $7.1 billion was very close to the 2007 record of $7.2 billion, with non-investment grade and unrated issuance also recording a new high, according to WCMA’s latest insurance-linked securities (ILS) market report.
Overall outstanding capacity at year-end reached $18 billion and has now grown at a compounded growth rate of 18% since 2000.
Q4 2013 saw $1.8 billion of non-life catastrophe bond capacity raised in seven deals, whereas Q4 2012 saw $1.9 billion issued in seven deals.
All but one of the Q4 2013 issuances were sponsored by repeat sponsors, with Queen City Re, sponsored by newcomer American Modern Insurance, being the sole exception.
Bill Dubinsky, head of ILS at WCMA, said: “[This year] may prove to be a pivotal year for the cat bond and sidecar markets. On the one hand, 2013 was a banner year for cat bonds, sidecars, and collateralised reinsurance with $7.1 billion in non-life cat bond issuance and considerable sidecar activity despite the softening market conditions.”
“On the other hand, traditional reinsurers are reacting aggressively to maintain market share by launching preemptive quotes to defend previously unassailable positions on the programs of favored clients.”
Tony Ursano, CEO of WCMA, said: “The reinsurance industry is in the midst of a gradual transformation as the inflows of third party capital continue to increase. We expect that 2014 will be marked by innovation, seeing new sponsors, new perils and new structures come to market in an effort to meet investors demand for risk.”
