Catastrophe Bond Market Growth Up 42 Percent in 2003, According to Guy Carpenter & MMC Securities.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 26, 2004

New study sees trend toward larger transactions

continuing as catastrophe bond market matures

The catastrophe bond market experienced substantial growth as catastrophe bonds remained an important complement to the reinsurance market in 2003, according to findings from a new joint study by Guy Carpenter & Company, Inc. ("Guy Carpenter") and MMC Securities Corp. ("MMC Securities") announced today. In 2003, total bond issuance reached $1.73 billion, representing a 42 percent year on year increase from the 2002 total of $1.22 billion.

The study also indicated a trend toward larger bond transactions, with an average issue size of $217 million in 2003, up from $174 million in the previous year. The largest transaction to date, the three-tranche Zenkoryen Phoenix issue valued at $470 million, also took place in 2003.

"Catastrophe bonds represent a relatively new and important source of capital for insurance and reinsurance companies with large risk transfer needs," said Managing Director Christopher McGhee, head of Guy Carpenter's Investment Banking Practice and Managing Director of MMC Securities. "The expanding and increasingly sophisticated institutional investor base for these securities, combined with the decreasing costs of issuing them, may help drive growth in this market."

Other key report findings include:

-- Bond issuing costs trending downward - In certain cases,

catastrophe bonds were competitive in cost with traditional

reinsurance in 2003, with issuing costs generally trending

downward with respect to both coupon to investor and

transaction expenses.

-- Investor demand on the rise - The investor base for this asset

class continued to increase at a steady pace in 2003, with

total funds under management by dedicated catastrophe bonds to

exceed $3 billion in 2004.

-- Earthquakes ranked as leading risk - California earthquake,

followed closely by Japan earthquake, were the perils and

geographies most securitized in 2003. East Coast hurricane and

European winter storm also accounted for much of the risk

capital placed last year.

"It was another promising year overall for the catastrophe bond market, marked by impressive growth and several first-time issuers," said McGhee. "While bond structures are becoming more standardized over time, we expect innovations to continue as issuers seek to facilitate transactions and new capital enters the market."

Copies of the study, Market Update: The Catastrophe Bond Market at Year-End 2003, are available for download at www.guycarp.com. For printed copies, please contact Guy Carpenter at [e-mail].

MMC Securities Corp., a registered broker dealer, is the investment banking arm of Marsh & McLennan Companies, Inc. (symbol: MMC), a global professional services firm.

Guy Carpenter & Company, Inc. is the world's leading risk and reinsurance specialist and a part of the Marsh & McLennan Companies, Inc. Guy Carpenter creates and executes reinsurance and risk management solutions for clients worldwide through more than 2,400 professionals across the globe. The firm's full breadth of services includes 15 centers of excellence in Accident & Health, Agriculture, Captive and Program Managers, Environmental, General Casualty, Investment Banking*, Life & Annuity, Marine and Energy, Professional Liability, Property, Retrocessional, Structured Risk, Surety, Terror Risk, and Workers Compensation. In addition, Guy Carpenter's Instrat(R) unit utilizes industry-leading quantitative skills and modeling tools that optimize the reinsurance decision-making process and help make the firm's clients more successful. Guy Carpenter's website address is www.guycarp.com.

* Securities are offered in the United States through MMC Securities Corp., Member NASD/SIPC. MMC Securities Corp. is an affiliate of Guy Carpenter & Company, Inc.