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Willis ILS Report: 2012 Sees Second Strongest Catastrophe Bond Issuance on Record

Source: Willis


Posted on 31 Jan 2013 by Neilson

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Willis cat bondsLast year saw the second highest level of catastrophe bond issuance on record signalling strong growth in the market, according to Willis Capital Markets & Advisory (WCMA), part of global insurance broker, Willis Group Holdings.

At year end $5.9 billion of catastrophe bonds had been issued, representing a 37% increase over 2011, according to the latest Insurance-Linked Securities (ILS) Market Update from WCMA.

The fourth quarter of 2012 saw new issuance volume of $1.9 billion of non-life capacity. This capacity was issued through seven transactions, which compares with the same volume ($1.9 billion) in nine deals in Q4 2011. Three transactions were sponsored by reinsurers, three by primary insurers and one by a government entity.

US hurricane risk continues to be the predominant catastrophic natural peril being securitized and sold in the capital markets - with 71% of outstanding cat bond limits exposed to some form of US hurricane risk.

While money continued to flow into ILS funds during the final quarter of 2012, primary issuance was still insufficient to meet investor demand. This triggered bidding wars on some bonds.

Bill Dubinsky, Head of ILS at WCMA, said: "Most ILS investors were hoping that early December would be full of new issuances as it had been historically. However they were disappointed to have fewer bonds than necessary to meet their cash inflows. We believe investors will anxiously welcome the new issuances that are in the pipeline."

The full year report also features an interview with Gary Martucci, Director of Standard & Poor's Financial Services Ratings Group.

Willis Capital Markets & Advisory, with offices in New York and London, provides advice to insurance and reinsurance companies on a broad array of merger and acquisition transactions as well as capital markets products such as insurance-linked securities. Nothing in this communication constitutes any legal or financial advice or an offer or solicitation to sell or purchase any securities.

Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 employees serving clients in virtually every part of the world. Additional information on Willis may be found at www.willis.com.


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