Catastrophe bond activity was healthy during the third quarter of 2015, according to GC Securities, confirming that the capital markets are continuing to influence risk transfer provision for natural catastrophes. June to September 2015 was the fourth highest third quarter catastrophe bond issuance on record.
The quarterly cat bond update from GC Securities reports $650m cat bonds executed from in Q3, bringing the total for 2015 to 30 September to $4.5 billion. Total outstanding cat bonds have fallen slightly – just under 5% from record 2014 year-end.
“Pricing generally held steady with investors spending time on portfolio management,” said the report, adding: “Ample capital remains available and conversations with managers indicate most are continuing to grow pragmatically, grow assets under management or hold at constant levels.”
US perils are still the bedrock of the cat bond market, with more than 70% of existing contracts exposed to US hurricanes and earthquakes. Diversification develops gradually, but Cory Anger, Global Head of ILS Structuring, GC Securities expects to see new perils, territories, protection structures and sponsors emerging.
Evidence in the third quarter comes from the successful execution of Acorn Re Ltd., which provides earthquake protection from British Columbia, through several US western states, to the states of Baja California, Baja California Sur and Sonora in Mexico.
Another notable transaction in the third quarter of 2015 was the Bosphorus Ltd., series notes that provide the Turkish Catastrophe Insurance Pool (TCIP) with $100m protection for three years for earthquakes in the Istanbul region.
The full briefing is available at www.GCCapitalIdeas.com