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Predictions for 2015: Gary Martucci & Maren Josefs, Standard & Poor’s


The eighth in this series of articles involving leading figures from insurance-linked securities (ILS) and reinsurance on the markets prospects for 2015 features Gary Martucci and Maren Josefs from Standard & Poor’s.

We asked for participants thoughts and predictions about the ILS market, catastrophe bonds, collateralized reinsurance and reinsurance or catastrophe risks as an asset class as we move into 2015.

Standard & Poor's logoGary Martucci and Maren Josefs are Director and Associate Director of Financial Service Ratings at Standard & Poor’s. Both are focused on financial services ratings and as a result cover any catastrophe bonds or ILS which are analysed by S&P, as well as analysing market trends in insurance and reinsurance capital.

Gary and Maren provided their thoughts on what we might see in the cat bond and ILS market as 2015 progresses.

Their response follows in full below:

We do not expect significant changes to the cat bond market.

The reservation multiple to expected loss (the lowest multiple investors will accept) has for the most part been determined for the traditional covered perils.

Issuance will likely be similar to slightly higher than 2014 as reinsurers continue to compete with ILS investors.

We expect more first time issuers to sponsor bonds (not only publicly but also with more small deals placed privately).

We also expect to continue seeing more non-traditional sponsors such as municipal agencies and regional economic development funds to buy protection against natural catastrophes in the traditional and alternative markets. The topic is currently high on the agenda of global climate change discussions and we expect to see some of the recent efforts bearing fruit in 2015.

There have also been talks about transactions coming to market that provide protection against new perils such as earthquake in China and U.S. flood. So we would not be surprised if a deal or two was completed that covered one of these perils.

In 2014, there have been some deals that have covered unmodeled perils (volcanic eruptions) and we anticipate more deals including these.

There continues to be substantial amount of available capital in this sector which will continue to keep risk transfer prices low.

ILS funds have started to use more traditional structures to access risks at different ends of the risk spectrum. This requires considerable underwriting experience.

From our perspective, we continue to caution investors that growth should not come at the expense of looser underwriting discipline and less due diligence.

We also anticipate the current trend of driving down issuance costs to continue in 2015 as various private cat bond platforms have been set up in 2014 and the market share of rated transactions continues to fall.

Further, if there were a major event (without surprises), we expect the alternative capital to stay invested in ILS and keep reinsurance prices from hardening significantly.

There has been a proposal put forth to the NAIC by Nationwide and the North American CRO Forum that could encourage greater participation in this market by life insurance companies and significantly alter the landscape.


Our thanks to Gary Martucci and Maren Josefs for their time.

Read previous Artemis interviews, including other predictions for 2015, here.

Like to be featured in an interview on Artemis or have some thoughts on the market for 2015? Contact us to discuss.

Artemis’ Q4 2014 Catastrophe Bond & ILS Market Report – A busy finish to a record year for ILS

Q4 2014 Catastrophe Bond & ILS Market Report – A busy finish to a record year for ILSWe’ve now published our Q4 2014 catastrophe bond & ILS market report.

This report reviews the catastrophe bond and insurance-linked securities (ILS) market at the end of the fourth-quarter of 2014, looking at the new risk capital issued and the composition of the cat bond & ILS transactions completed during Q4 2014. It also includes a brief review of the full-year 2014’s record issuance.

Download your copy here.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

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