NU Online News Service, April 13, 2:55 p.m.EDT

Catastrophe bond issuance activity is not expected to re-visitthe record-breaking levels of 2007, but estimates currently put2009 on track to supplant 2008 as the third-busiest year for catbonds, according to a brokerage forecast.

The briefing, published by Guy Carpenter & Company, LLC,said three bonds were closed in the first quarter of 2009, equaling2008's first-quarter activity. The three bonds followed five monthsof silence since the last issuance in August 2008, the brokeragesaid.

It cited the ongoing global financial troubles for the slowdownduring that period.

It is still too early to say whether the catastrophe bond marketwill be impacted further by the economy, according to the report,but it adds that the 2009 first-quarter resurgence is "certainly apositive sign."

For all of 2009, Guy Carpenter reported, the "consensusestimate" for issuance activity is $3 billion, conditional onmarket conditions.

If that level is reached, the firm said it "would result in an11.1 percent year-over-year increase in catastrophe bond capitaloutstanding, as well as 2009 supplanting 2008 as the third-busiestissuance year in the history of the catastrophe bond market."

In 2008, 13 issues resulted in $2.7 billion in new and renewalcapacity. In 2007, a record-setting year, there were 27 bondissues, accounting for $7 billion in capacity. The second-highesttotals were in 2006, which saw 20 issues for $4.7 billion incapacity.

In the 2009 first quarter, Guy Carpenter reported the threebonds closed resulted in $575 million in capital. The number oftransactions equaled 2008's first quarter.

All three transactions were for U.S. hurricane and earthquakeperils only. Guy Carpenter said "the coverage of U.S. perils onlyin the first quarter of 2009 represents a distinct change from thefirst quarter of 2008, in which $400 million in risk capital hadexposure to non-U.S. perils."

Also during the 2009 first quarter, six transactions matured andone was redeemed early, removing $650 million from the catastrophebond market, resulting in a net decrease in risk capital for thefirst quarter of $75 million.

David Priebe, chairman of Global Client Development at GuyCarpenter, said in a statement: "The outlook for the remainder of2009 is positive, with a strong pipeline of deals in the works.Sponsors are increasingly integrating catastrophe bonds into theirrisk management plans and leveraging these instruments as strategictools for moving risk out of carrier portfolios."

Chi Hum, global head of distribution, GC Securities, added,"Though a return to the pace of 2007 is unlikely, we expect 2009 tobe a busy year, with most issuances coming from experiencedsponsors with clear risk management objectives and investmentinterest from specialists who are familiar with the territory."