NU Online News Service, Feb. 10, 2:57 p.m.EST

Insurance-linked securities had another active fourth quarter,but did not break any placement records for 2011 according to areport from Willis Group Holdings.

In its “ILS Market Update” Willis says 2011fourth-quarter catastrophe bond issuance came in at close to $2billion compared to the previous year's $2.02 billion.

For the year, total catastrophe-bond issuance was $4.3 billion,compared to 2010's total of $4.8 billion.

Willis says the drop compared to 2010 was driven by theuncertainties caused by loss activity in the early part of the yearand the significant changes made in the RMS catastrophe modelversion 11 forU.S.hurricane risk.

Bill Dubinsky, head of insurance-linked securities at WillisCapital Markets and Advisory, a part of Willis Group Holdings, saysin a statement, “2011 finished as could be expected, with thequarter's performance proving the strongest of the year. While weare seeing a temporary slowing of net-capital inflows due to thewider economic climate, particularly in the Eurozone, we expect thegrowth in investor capital to continue. Combined with the potentialfor innovation in the market, taking in new perils, structures anddifferent forms of risk-taking, in 2012 we may see non-lifeissuance break the $5 billion mark for the first time since2007.”

There were a total of nine issues in the fourth quarter,dominated byU.S.hurricane risks. Willis says that 68 percent ofoutstanding bond risk is exposed to hurricane risk in someform.

Chartis had the largest issue in the quarter: $575 million fromits Compass Re catastrophe-bond vehicle.

Willis notes that Chartis has $1.45 billion of bondsoutstanding, or 11 percent of the total market. The Compass Reprogram protects againstU.S.hurricanes and earthquakes for threeyears.

The quarter also saw the establishment of Golden State Responsored by the California State Compensation Insurance Fund. This$200 million tranche provides three years protection resultingfromU.S.earthquakes against workers' compensation claims. Willisnotes this is the first catastrophe bond designed to exclusivelycover a portfolio of workers' comp exposures.