Q3 catastrophe bond issuance highest in 15 years, Willis says

The third quarter of the year had the highest issuance of catastrophe bonds in 15 years, Willis Capital Markets & Advisory says in a recent report.

The quarter saw $1.4 billion of non-life catastrophe bond capacity issued through seven bonds, compared with $0.5 billion issued through three bonds in the third quarter of 2012, the company says in its latest Insurance Linked Securities report.

That means Q3 issuance this year was about three times higher than the five-year average, WCMA added.

“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,” Bill Dubinsky, head of ILS at WCMA noted in a statement.

“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.”

“Some investors are encouraging more catastrophe bond issuance so that they can continue to fulfil mandates for liquid investments,” he also noted.

“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.”