Hurricane Sandy expected to have minimal impact on catastrophe bond market
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Hurricane Sandy will have minimal impact on catastrophe bond market, Willis Capital Markets & Advisory, a unit of London-based insurance broker Willis Group Holdings P.L.C., said on Wednesday.
Despite the scale of the storm, it is unlikely that any bonds will be triggered solely by Sandy, Bill Dubinsky, head of insurance-linked securities at WCMA, said in a statement.
“Based on initial loss estimates from modeling firms, we believe that Hurricane Sandy will have little if any impact on new issue pricing in the catastrophe bond market, especially outside the U.S.,” Mr. Dubinsky said. “Of course, if losses mount and early estimates prove wrong, some bonds could be at risk.”
Mr. Dubinsky said that investor demand for ILS was strong, noting that Willis had forecasted total 2012 issuance remains in the $5.5 billion to $6 billion range. “Over time we expect the catastrophe bond market will expand to encompass more risks and shift towards a greater acceptance of indemnity triggered structures,” he said. “However, we expect more rapid growth will continue to be observed in simpler, private collateralized reinsurance transactions.”
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