Looking back, this time last year the catastrophe bond market was noticeable only for the tumbleweed – it was deathly quiet. This year the level of activity has picked up. Guy Carpenter has released their Q3 update, which provides a really useful summary of recent activity. Over the last quarter there were two new issuances, resulting in $412m of new capital in the market. Despite this relative calm – the issuance was up by a third when compared to the same quarter last year. This takes the total so far this year to 11 (with MultiCat Mexico 2009 coming soon), that makes $1.79bn in risk capital.

However, the fourth quarter is upon us and broader market conditions appear to be more conducive for more activity. The pipeline looks healthy right now, and historically, Guy Carpenter say the fourth quarter is the second most active of the year. GC’s consensus estimate for the year remains $3bn to $4bn, implying a strong fourth quarter for primary issuance.
One of the other features of this sector, as it begins to mature, is that there is a slug of outstanding risk capital that has matured. In the third quarter of 2009, $300m in catastrophe bond risk capital matured, bringing the year-to-date total to $2.5bn. Another $660m is scheduled to mature in the fourth quarter of this year.

Tags: catastrophe bonds

This entry was posted by Vinay Mistry on Thursday, October 15th, 2009 at 11:51 am and is filed under Exposure Management.