Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Clariden Leu: Four to five publicly placed catastrophe bonds expected by year end


Insurance-linked securities focused Swiss private bank and investment manager Clariden Leu have said that based on discussions they had with market participants at the Monte Carlo Rendezvous in September they expect to see four to five publicly issued catastrophe bond transactions by the end of the year.

In addition they expect that private cat bond transactions will continue to become more common, a sentiment that is widely shared around the market. It’s expected that private cat bond deals will see considerable growth in the coming months and that they will allow new sponsors to test the market and potentially bring new risks into the ILS space.

Clariden Leu also say that they will continue to utilise their own private cat bond structures, known as a “cat bond lite”, to enable their own clients to participate in liquid ILS transactions despite what they call a “rather dry market environment”.

Given that two cat bonds are already marketing in the fourth quarter (Calypso Capital and Queen Street IV Capital) and this statement came from Clariden Leu in their end of September managers report it suggests that just three more public deals will begin  marketing before the end of the year. Some observers will see that as a little disappointing and will have expected more upcoming transactions, but given the way the market has behaved through 2011 we wouldn’t find it that surprising. In fact in conversations with market participants we have heard that some are expecting another bumper Q1 in 2012 as they believe that the January renewals will drive the number of deals to come to market. Of course there could be a life transaction before year-end as well which Clariden Leu may not have been including in their forecast.

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