PCS Triggers Used for $1.6 Billion in 2012 Catastrophe Bond Limits

January 1, 2011 / 2 min read

Jersey City, N.J. – July 9, 2012 — With two quarters completed in 2012, the catastrophe bond market remains robust. According to a new report from Property Claim Services®(PCS®), the similarities between the 2007 and 2012 catastrophe bond issuance years are striking. PCS is a unit of Verisk Analytics (Nasdaq:VRSK).

The report, PCS Catastrophe Bond Report: Is It 2012 or 2007, includes the following key findings:

The use of PCS triggers has increased 33 percent year over year, accounting for $1.6 billion in newly issued limits out of an estimated $3.6 billion in first-half 2012 transactions.
The number of catastrophe bonds with PCS triggers grew from seven for the first half of 2011 to nine for the first half of 2012, an increase of 22 percent.
In some ways, 2012 is reminiscent of 2007, with a large indemnity-triggered catastrophe bond coming to market in an already robust year for issuance. This year, it was Everglades Reinsurance Ltd., with $750 million in limits.
Talk of a shift in catastrophe bond tenor may have started several years ago, but it is now firmly taking root, with more transactions carrying four-year durations.
PCS continues to focus on cross-border growth, the trigger used for the first catastrophe bond issued that covers earthquake risk in Canada (as well as the United States), with another trigger used for hurricane risk in the United States and the Caribbean.

“Is 2012 like 2007? That’s the big question everyone seems to be asking,” said Gary Kerney, assistant vice president of PCS. “The big indemnity-triggered transactions from then and now — Merna Re and Everglades Re — certainly make you think about it. And overall issuance volume is expected to be in the neighborhood of the 2007 results.”

“At the beginning of hurricane season, it’s just too soon to tell,” he concludes. “One catastrophe could change everything.”

About Verisk Analytics
Verisk Analytics (Nasdaq:VRSK) is a leading provider of information about risk to professionals in insurance, healthcare, mortgage, government, and risk management. Using advanced technologies to collect and analyze billions of records, Verisk Analytics draws on vast industry expertise and unique proprietary data sets to provide predictive analytics and decision support solutions in fraud prevention, actuarial science, insurance coverages, fire protection, catastrophe and weather risk, data management, and many other fields. In the United States and around the world, Verisk Analytics helps customers protect people, property, and financial assets. For more information, visit www.verisk.com.

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Eva Huston
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