The third quarter of 2013 saw $1.4 billion of non-life catastrophe bond capacity issued through seven bonds, in comparison with $0.5 billion issued through three bonds in the third quarter of 2012, according to Willis Capital Markets & Advisory (WCMA), part of Willis Group Holdings (NYSE: WSH), the global risk advisor, insurance and reinsurance broker.
Third quarter 2013 catastrophe bond issuance was approximately three times higher than the five year average and was the highest on record since 1998, according to WCMA in its latest 'Insurance Linked Securities' (ILS) report.
Bill Dubinsky, Head of ILS at WCMA, said: "If fourth quarter issuance remains at a similar level to that of recent years it will be a record year for ILS issuance, surpassing the 2007 record. Outstanding capacity has now grown in each of the past five years, with the currently outstanding capacity of $17.3 billion, representing an all-time high."
Elsewhere in the report, WCMA explores how some traditional reinsurers are responding to the influx of capital into the reinsurance market, by managing increasing amounts of investor capital in funds and sidecars, as well as sponsoring deals themselves.
Dubinsky added: "Some investors are encouraging more catastrophe bond issuance so that they can continue to fulfil mandates for liquid investments. Other investors are chasing the illiquidity in collateralised reinsurance as a mechanism to protect themselves from the ruthless price pressure in a well run syndication process."
The report also contains an interview with Dr Andreas Müller, Head of Origination, Distribution and ILS investments at Munich Re's Risk Trading Unit.
To download the report click here.
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