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2013 is shaping up to be the strongest year for cat bond activity in six years, with a record-breaking $4bn of new issuance having been brought to market by the end of June - topping the $3.8bn issued in the first half of 2007
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Brokers have increased their grip on cat bond distribution in the past couple of years, according to statistics compiled by Trading Risk
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The number of unrated cat bonds has increased sharply in 2013 as sponsors forego the expense of seeking a rating
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ILS fund managers have perhaps never faced a more challenging time to keep their capital inflows in pace with investment opportunities, despite making significant inroads into the property catastrophe reinsurance market and with ILS issuance on track for a bumper year
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Florida Citizens Property Insurance was a stand-out example of the alternative reinsurance market lifting its market share at the 1 June renewals, as hedge fund-backed reinsurer DE Shaw and Bermudian fund manager Nephila Capital put down significant lines of capacity on the state insurer's traditional reinsurance programme.
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Reinsurance quoting activity stabilised in Florida at the 1 June renewal after much more volatile pricing conditions in 2012 and 2011.
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Reinsurance buyers continued to look for greater aggregate or sideways cover at the mid-year renewals - a trend that works to the strengths of capital market reinsurers as they continue to lift their market share.
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Sidecar fees remain above the standard rate for ILS fund managers but are also coming under pressure in a softening property catastrophe market, Trading Risk understands.
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The capital markets undoubtedly dampened rate conditions at the 1 April renewals and are also having a "dramatic" influence on expected pricing at the June and July renewals, according to GC Securities' review of first quarter activity in the ILS market.
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Capital market reinsurance capacity could rise by one third over the next three years to provide $57bn of limit by 2016, GC Securities estimated in a recent new Clear Path Analysis ILS market report.
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Reinsurance programme restructures from two very different buyers in the lead-up to the key mid-year wind renewal have provided early evidence of an expected increase in participation from alternative providers in the traditional open market for US cat reinsurance.
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Niklaus Hilti, ILS manager at Credit Suisse - the second-largest operator in the ILS fund sector - said last year that reinsurers trying to take on the funds management business "all think this is El Dorado".
