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Matthew Lerner

New cat bond issuance reached record $7.08 billion in 2013: Report

February 27, 2014 - 1:22pm

Catastrophe Bonds


New property/casualty catastrophe bond issuance reached a record $7.08 billion in 2013, according to a new report from Guy Carpenter & Co. L.L.C. released Thursday.

The $18.58 billion of total risk capital outstanding also was an all-time high, according to “Catastrophe Bond Update: Fourth Quarter 2013,” the reinsurance broker said in a statement.

The $1.82 billion of capacity issued in fourth quarter 2013 was “a level of issuance consistent with the fourth quarters in previous years,” said the report, and was “minimally offset” by $360 million in catastrophe bond maturities.

Seven new sponsors collectively secured $1.46 billion of catastrophe bond capacity, said Cory Anger, global head of insurance-linked securities for Guy Carpenter's GC Securities, in the statement.

“As the catastrophe bond market continues to mature, more new sponsors are looking to the alternative market space for meaningful capacity, and we expect that this trend is likely to continue through 2014,” said Chi Hum, global head of distribution for ILS for GC Securities, in the statement.

Investor demand for catastrophe bonds continue to be robust despite a decline in pricing over the past 12 months, said the report.

“The growing influence of alternative markets capacity is pressuring traditional reinsurers' business model and challenging them to compete against a model with lower-cost of capital that continues to enter the reinsurance market,” said Mr. Hum.

 



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