Willis ILS Report: Q1 2013 Sees $1.6 Billion in New Cat Bond Issuance

May 22, 2013

The first quarter of 2013 saw $1.6 billion of new issuance in non-life capacity marketed through five catastrophe bond transactions, including three transactions marketed in the first quarter and closed at the beginning of the second quarter, according to Willis Capital Markets & Advisory (WCMA).

This compares with eight deals and a total of $1.3 billion in new non-life capacity in the first three months of last year, said the WCMA in its most recent Insurance Linked Securities (ILS) report.

“The new capacity is coming from two sources: new inflows to existing ILS specialists coupled with the return of generalist investors,” according to the report. WCMA said that it “expects the catastrophe bond pipeline to convert into a record issuance over the course of the rest of the year.”

Bill Dubinsky, head of ILS at WCMA, said the activity is growing.

“After a slow start, 2013 is roaring forward with a flurry of cat bond, sidecar, and collateralized reinsurance activity. Collectively, capital markets insurance capacity significantly outsizes the surplus of the leading non-life reinsurers, excluding Berkshire Hathaway,” Dubinsky said. “Meanwhile, almost all major Bermuda reinsurers, except one, have third party capital initiatives in place. We may be witnessing the moment when the capital markets have moved from the sideshow to the main tent.”

Source: Willis Group Holdings plc

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