Three CAT bonds are expected to be brought to market in late January or in February, according to a publication called The Insurance Insider, boosting the insurance-linked securities (ILS) pipeline.
The report said that Marsh & McLennan Cos. unit Guy Carpenter & Co. and Aon Corp. unit Aon Benfield along with Deutsche Bank are coming to ILS investors in early January with with three different transactions that sources of the The Insurance Insider said will "look like and smell like a typical CAT bond, but be improved with regard to collateral." The three said firms declined to comment, according to the report.
Meanwhile, Bermuda-based Nephila Holdings unit Nephila Capital, which buys across the entire convergence sector, is hopeful regarding the prospect of new cat bond issuance, The Insurance Insider said.
"There are a lot of people talking about deals which may come to market. We are awaiting the real manifestation of that pipeline," Nephila's Barney Schauble told The Insurance Insider. "If there's record cat bond issuance in 2009 we would participate in that market, but if there's zero new issuance, we are still seeing many attractive ways to put our capital to work."
According to the report, many ILS investors are now employing capital in the secondary cat bond market, where they still see value.