Monday, July 27, 2009
Despite a decline in the number of issuances the catastrophe bond market continues to advance helped by continued stabilization in the global financial markets, according to the latest review of the market from Guy Carpenter. It reveals that six catastrophe bond transactions were completed in the second quarter of 2009, down 25 percent from eight transactions in the second quarter of 2008, while risk principal issued was $808 million, off 54 percent from $1.75 billion issued during the year earlier period. This brings the tally for the first half of 2009 to nine catastrophe bonds issued, accounting for aggregate risk capital of $1.38 billion. Two quarters into 2009, total cat bond risk capital outstanding fell 7 percent to $11.2 billion, the second consecutive quarter in which total risk capital outstanding declined. However, Guy Carpenter says several factors may converge to make conditions more favorable to cat bond sponsors for the rest of the year, assuming no major catastrophes, including an improvement in broader capital market conditions as the general economy stabilizes and distance from last yearâ€™s financial crisis increases, and increased risk capacity as a result of reduction or restructuring in some traditional reinsurance programs. Check out further I.I.I. information on alternative risk-financing options.