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Cat bonds are set to buck the trend elsewhere in the ILS market, with a strong issuance pipeline for Q4 2020 and Q1 2021. This is according to Des Potter, managing director ILS origination and structuring at GC Securities, part of Guy Carpenter, in an interview with Artemis.
Encouraged by the firming of reinsurance and retrocession rates, he thought cat bonds would help fill the capacity gap in the retrocession market, where the availability of collateralised aggregate protection has dropped off significantly since 2019.
“We’re seeing a shift away from collateralised reinsurance into the bond market to try to reduce some of the pressure that may exist because investors in the collateralised reinsurance space are pulling back. We’re expecting to see quite an active Q4 in terms of cat bond issuance.”