The catastrophe reinsurance market may be about to undergo a “significant strategic development,” according to a report issued this week by Willis.The latest insurance-linked securities (ILS) report put out by Willis Capital Markets & Advisory (WCMA), part of the global insurance broker, Willis Group Holdings, says third-party capital providers will play a growing role in the catastrophe reinsurance market.The report, titled, “Strong Momentum Continues into 2012 Hurricane Season” looks back at the issuance in Q2 of 2012, comments on specific deals and gives some insight into the secondary market. In the report, WCMA concludes that going forward, the catastrophe reinsurance market is going to see continuing and growing involvement of third-party capital providers.The report notes that unlisted vehicles as well as specialist independent catastrophe risk funds are likely to gain a larger share of the catastrophe risk market in collateralised form over the medium term.“In our view, we may be seeing the early stages of a significant strategic development in the catastrophe reinsurance market,” said the report. “In the future, we believe increasing amounts of peak catastrophe risk will be taken by third-party capital providers writing alongside existing reinsurance businesses.”The report said there were seven new catastrophe bonds totalling $2.1 billion issued in the second quarter of 2012. That compares with four deals worth $600 million in the same period a year earlier.“The current market outlook is very encouraging,” said Bill Dubinsky, New York-based head of ILS at Willis Capital Markets & Advisory. “Reduced risk spreads as a result of strong investor demand and available capital should stimulate increased issuance from sponsors in the future. In the absence of a significant catastrophe, we would expect the total issuance for this year to be in the $5.5 billion to $6 billion range.”According to the report, outstanding on risk-capacity increased by just over $700 million during the second quarter to $14 billion.US hurricane-exposed transactions continue to dominate the non-life market, with 73 percent of outstanding cat bonds exposed to US hurricane risk of some form.