Record Volume of Cat Bonds Issued in Q2 2014 - Willis Capital Markets & Advisory

$4.5 Billion of Non-Life Catastrophe Bond Capacity Beats Previous Record of $3.5 Billion Issued in Q2 2007

        Print
| Source: Willis Group Holdings

NEW YORK, July 7, 2014 (GLOBE NEWSWIRE) -- The largest ever volume of non-life catastrophe bonds was issued during the second quarter of 2014 (Q2), according to a report by Willis Capital Markets & Advisory (WCMA), part of Willis Group Holdings plc (NYSE:WSH), the global risk advisor, insurance and reinsurance broker.

WCMA's latest insurance-linked securities market update, published this week, found that in Q2, $4.5 billion of non-life catastrophe bond capacity was issued in 17 deals, compared with $3.3 billion issued in 17 deals in the same quarter of last year. This beats the previous quarterly record of $3.5 billion of non-life catastrophe bond capacity issued in Q2 2007.

The report noted that the record issuance was driven by two of the largest ever catastrophe bond transactions; Everglades Re 2014, a $1.5 billion bond for Florida Citizens and two Sanders Re 2014 takedowns totalling $950 million in new capacity for Allstate.

Tony Ursano, CEO of WCMA said: "In Q2, the ILS market continued to evolve, progressing its gradual transition from a niche and emerging market into a more mainstream alternative asset class.

"Not only did we see the largest ever single transaction cat bond in Q2, but we also witnessed several other notable achievements including the first indemnity-trigger cat bond for a primary company's Euro Wind exposure, the first yen-dominated deal, as well as the fastest ever takedown."

The report also found that individual insureds, or large corporates, have not yet joined the market to the extent expected following the 2013 MetroCat deal and the declining spreads of the last year.

"Risk managers often prefer an indemnity trigger, which some brokers view as tricky to achieve for an individual insured. Additionally, many risk managers and brokers lack access to the modelling information necessary to provide price indications. Nonetheless, given the continued interest, we still expect some of these deals to eventually reach the market," Bill Dubinsky, Head of ILS at WCMA said.

Commenting on the outlook for the remainder of the year, Ursano said: "While we expect Q3 to be relatively quiet, Q4 should be busy even if spreads remain flat or have a slight uptick against the back drop of a loss free third quarter.

"Given the spread environment and the busy second quarter, we feel optimistic that 2014 will end up a record setting year for the cat bond market. By year end, we expect eight to nine billion dollars in total non-life cat bond issuance, whilst the broader ILS market, including private deals and deals with coverage extending beyond property cat, should exceed this considerably."

To access the full report, please click here.

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 18,000 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, London and Hong Kong, 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. Willis Capital Markets & Advisory is a trade name used by Willis Securities, Inc., a licensed broker dealer authorized and regulated by FINRA and a member of SIPC, and Willis Capital Markets & Advisory Limited, an investment business authorized and regulated by the UK Financial Conduct Authority.

This communication should not be regarded as an offer to sell or as a solicitation of an offer to buy, 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. No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present or the future. Information contained in this communication may not reflect information known to other employees in any other business areas of Willis Group and its affiliates.

Media:
Florrie Critchley
+44 20 3124 8603
Email: 

Investors:
Peter Poillon
+1 212 915 8084
Email: