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Q2 2013 Sees $2.2 Billion of New Non-Life Cat Bond Issuance: Willis Capital Markets & Advisory

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Posted on 24 Jul 2013 by Neilson

Willis cat marketThe second quarter of 2013 saw $2.2 billion of non-life catastrophe bonds issued through 14 tranches (representing 10 deals), compared with $2.1 billion issued in Q2 2012 through 12 tranches (representing 7 deals), according to Willis Capital Markets & Advisory (WCMA), part of Willis Group Holdings, the global risk advisor, insurance and reinsurance broker.

This follows hot on the heels of a strong first quarter in which the market saw $1.6 billion of issuance, and brings total non-life capacity issued for the year so far to $3.8 billion, said WCMA in its latest 'Insurance Linked Securities' (ILS) report.

Elsewhere in the report, WCMA raises the question of how far the cat bond and collateralised reinsurance market could expand beyond its mainstay of natural catastrophe perils. "To continue the same pace of growth we have seen in the last few years the ILS market will need to accept a growing pool of perils," according to Bill Dubinsky, Head of ILS at WCMA.

"Some of these new perils are evolutionary, not revolutionary such as earthquake risk in areas like Colombia, Chile, Israel and even China. Others may represent a more radical departure from market norms. For example, will investors accept standalone US terrorism risk if TRIPRA* is not renewed? Will casualty risk finally become more at home in the capital markets?"

Offering a prediction for the year ahead, Dubinsky continued: "Our current best estimate for where the ILS market will end up in terms of issuance at the end of the year is $6 to $7 billion in non-life issuance (excluding private deals). If sponsors accelerate deal execution into 2013 that would otherwise have occurred in 2014, exceeding $7 billion seems quite possible.

"Of course sponsors, the majority of whom are insurers, will be watching the Atlantic and elsewhere to see what surprises Q3 2013 brings. A major storm or earthquake causing significant insured losses could change things very quickly."

About Willis

Willis Group Holdings plc is a leading global risk advisor, insurance and reinsurance broker. With roots dating to 1828, Willis operates today on every continent with more than 17,000 employees in over 400 offices. Willis offers its clients superior expertise, teamwork, innovation and market-leading products and professional services in risk management and transfer. Our experts rank among the world's leading authorities on analytics, modelling and mitigation strategies at the intersection of global commerce and extreme events. Find more information at our website, www.willis.com, our leadership journal, Resilience, or our up-to-the-minute blog on breaking news, WillisWire. Across geographies, industries and specialisms, Willis provides its local and multinational clients with resilience for a risky world.

About Willis Capital Markets & Advisory

Willis Capital Markets & Advisory, with offices in New York and London, provides advice to companies involved in the insurance and reinsurance industry on a broad array of mergers and acquisition transactions as well as capital markets products, including acting as underwriter or agent for primary issuances, operating a secondary insurance-linked securities trading desk and engaging in general capital markets and strategic advisory work.

This communication should not be regarded as an offer to sell or as a solicitation of an offer to buy, or, except with respect to an accompanying confirmation of transaction sheet, as a confirmation of terms of the purchase or sale of, any security. The information contained herein is as of this date only, is subject to change and does not contain all information necessary to adequately evaluate an investment in any financial instrument. Information contained in this communication may not reflect information known to other employees in any other business areas of Willis Group and its affiliates.

All the securities referred to herein having been sold, this announcement is a matter of record only. This communication does not constitute an offer to sell or the solicitation of an offer to buy the securities mentioned herein in any jurisdiction in which such an offer or solicitation is illegal. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act.


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