GC Securities increased its cat bond & ILS participation in 2015

by Artemis on February 16, 2016

GC Securities was involved in more than $2.4 billion of catastrophe bond and insurance-linked securities (ILS) transactions during 2015, growing its contribution to the outstanding market, according to data from the Artemis Deal Directory.

Speaking at the Marsh & McLennan Companies (Marsh) fourth quarter 2015 earnings call, President and Chief Executive Officer (CEO) of Guy Carpenter & Co., LLC, Alexander Moczarski, noted that the reinsurance broker continues to grow its activity in alternative reinsurance capital and ILS, highlighting its commitment to the cat bond space.

“We were top of the leagues in the cat bond space last year and we’ve got a good pipeline coming on,” said Moczarski.

Data from the Artemis Deal Directory shows that during 2015, GC Securities, which is the investment banking and capital markets structuring unit of reinsurance broker Guy Carpenter, was involved in nine 144A cat bond deals totalling $2.425 billion during last year, the only company to surpass the $2 billion mark.

Including the groundbreaking Panda Re 2015-1 privately placed cat bond, the first transaction to be sponsored by China Re P&C as well as the first cat bond to cover any Chinese catastrophe risks, the total was even higher at $2.475 billion.

However, as Aon Benfield Securities, now known as Aon Securities was involved in a significant $1.969 billion of transactions during last year, just $506 million less than GC Securities, the Artemis catastrophe bond and ILS issuance banks & brokers leader board shows that Aon still tops the list, with an impressive $9.888 billion of outstanding issuance from 36 deals.

GC Securities has caught up over the course of 2015, though, and from 29 deals the outstanding cat bond and ILS issuance it has worked on sits at $7.395 billion, making it second on the list in terms of outstanding issuance, and $951 million above Swiss Re Capital Markets, which sits in third place.

The catastrophe bond and ILS space is expected to continue its impressive growth path that has been evident over the last few years, with recent trends suggesting outright market growth could be achieved again in 2016 despite a high volume of maturities taking place in the first six months of the year.

While any commentary on issuance levels for the coming months is mostly speculative, Moczarski’s admission that the firm has a “good pipeline” of cat bond deals suggests the company is eager to further increase its involvement and share of the outstanding cat bond and ILS market.

However, despite GC Securities being the most prominent in terms of the number of deals it was involved with and the overall capacity of deals it worked on during 2015, it would likely need a significant reduction in Aon cat bond and ILS activity in the coming months to top the overall outstanding issuance leader board.

That being said, a similar trend during 2016 as witnessed last year would see GC Securities close the gap to Aon Securities even more, further cementing itself as one of the world’s most prolific structuring and placement agents within the catastrophe bond and ILS space.

So far in 2016, data from the Artemis Deal Directory reveals that three catastrophe bond transactions have completed, totalling $800 million. GC Securities is involved in two of the deals, totalling $600 million, while Aon Securities has participated in one of the deals, amounting to $300 million.

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