Cat Bond Market Resilient

What a difference a year can make†¦The catastrophe bond market, described as mainstream rather than alternative after a record-setting year in 2007, saw a sharp fall in issuance both in terms of risk capital and number of transactions in 2008. Guy Carpenter’s latest review of the market reveals that cat bond issuance volume fell 62 percent to $2.7 billion in 2008, from just under $7 billion in 2007 as a soft reinsurance market and the global financial crisis took their toll. Just 13 transactions were completed during the year, compared to 27 in 2007. At year-end 2008, total cat bond risk capital outstanding was $11.8 billion, a 14.5 percent decline from $13.8 billion in 2007. But a slow issuance year in 2008 masks a story of resilience and risk management flexibility, according to Guy Carpenter. For example, in terms of issuance volume it found that 2008 was the market’s third most active year since catastrophe bonds were introduced in 1997. Check out further I.I.I. information on alternative risk-financing options.  

Leave a Reply

Your email address will not be published. Required fields are marked *