9 April 2015 Insurance

Record quarter for cat bonds in Q1 2015

The first quarter of 2015 was the busiest quarter in catastrophe bond market history, exceeding 2012’s record of $1.3 billion.

This is according to a report by Property Claim Services (PCS), a division of Verisk Analytics, which added that capital raised was flat year over year, with seven completed transactions leading to $1.5 billion in fresh capital.

Issuance of cat bonds grew 23 percent in the first quarter of 2015, compared with the first quarter of 2014, with the average transaction size up slightly to $212 million.

Out of the seven cat bonds completed this year, six had exposure to North America, one had no exposure to North America and one focused on Japan.

According to the report, with the inclusion of cat bond lite transactions, first quarter capital raised would have been up 30 percent year over year, as momentum continues to grow.

It also states that in 2015, seven cat bond lites have already been issued, with limits of nearly $200 million and year over year, notional is up 57 percent, with completed cat bond lites climbing 75 percent, compared with four cat bond lite transactions which came to market in the first quarter of 2014, totalling $125 million.

“The use of cat bond lite structures could increase cedant access to, and participation in, the global catastrophe bond market. The structure, rigour, and discipline involved in issuing through a cat bond lite platform may give this form of issuance an edge over private catastrophe bonds,” said PCS.

“Interest is growing in the cat bond lite structure across the market, with the greatest opportunities from traditional insurers and reinsurers interested in securitising ILWs and other risk-transfer instruments. Inquiries to PCS about cat bond lite have grown significantly over the past year,” added the report.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk