(Corrects last paragraph to say WCMA is the capital markets arm
of "Willis Group", not "Willis Re")
July 7 The non-life catastrophe bond market
issued record volumes during the second quarter, Willis Capital
Markets & Advisory (WCMA) said, adding that it expects full-year
issuance to be between $8 billion and $9 billion.
Catastrophe bonds help insurers manage their exposure to
natural disasters by transferring potential losses to investment
funds. Investors receive a high yield on the bonds in return for
agreeing to cover damages they consider unlikely.
A global slump in interest rates since the financial crisis
has tempted more and more pension funds, institutional investors
and high net-worth individuals to invest in catastrophe bonds
and other capital market products.
Non-life catastrophe bond capacity rose 36 percent to $4.5
billion in the second quarter, WCMA said, driven by an
Everglades Re $1.5 billion bond for Florida's Citizens Property
Insurance Corp and two Sanders Re bonds totaling $950 million
for Allstate Corp. (bit.ly/1r2O7pY)
"We feel optimistic that 2014 will end up a record setting
year for the (catastrophe) bond market," WCMA Chief Executive
Tony Ursano said, adding that he expected a "relatively quiet"
third quarter and a "busy" final one.
WCMA is the capital markets arm of Willis Group.
(Reporting by Richa Naidu in Bangalore; Editing by Saumyadeb