Insurance-Linked-Securities Review

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16 January 2013 | In The News

Insurance-Linked-Securities (ILS) Market Review 2012 and Lakeside Re III Ltd. Transaction Update

Issuance activity exceeded maturities

Munich Re's latest Insurance-Linked Securities (ILS) market report covers key developments and provides detailed insight on issuance, pricing in the primary and secondary markets, and the ILS investor base during 2012. It also examines relevant trends in the market and provides a market forecast for the year 2013.

In a newsletter announcing the latest report Andreas Müller, Munich Re Risk Trading Unit, said, "Issuance activity once again exceeded maturities throughout 2012, which has led to a growth of total outstanding capacity and a record market size of $15.6bn. Both well-established cat bond players and new sponsors were active in the market with several issuances, which benefitted from the strong liquidity currently in the market as a result of ongoing capital inflows to dedicated ILS funds. For 2013, we expect the market to remain attractive, especially for non-US issuances, which will continue to benefit from the need among investors to diversify their portfolios. Moreover, the market has become increasingly receptive to non-standard structures and indemnity-based triggers."

The ILS Transaction Update sheds light on Lakeside Re III Ltd., Zurich's most recent cat bond transaction. Munich Re acted as joint lead structuring agent and co-placement agent and helped Zurich acquire $270m of collateralized, multi-year capacity for US and Canada earthquake. The transaction was heavily oversubscribed and closed at the low end of initial pricing guidance.

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