NU Online News Service, May 1, 12:22 p.m.EDT

The first quarter of 2012 hit a record in the catastrophe-bondmarket as property and casualty insurance sponsors introduced eightnew tranches, increasing the issuance of securities by 32 percentover the same period last year.

In its quarterly report, “Strong Start to 2012 Sees Record First QuarterIssuance,” insurance-broker Willis Capital Markets &Advisory says the market had more than $1.3 billion of non-lifecapacity compared to more than $1 billion for the same period lastyear.

The tranches were overwhelmingly dedicated toU.S.-hurricane exposure, closely followed by earthquake exposure.Typically, hurricane and earthquake were combined under the samesecurity.

“The market's strong momentum from late 2011 has continued intothe first quarter of 2012,” says Bill Dubinsky, head of insurancelinked securities at Willis Capital Markets & Advisory, in astatement. “Although spread levels have widened somewhat, webelieve the medium term outlook for the market remains encouraging.Growth in insured exposures should continue to drive capitalmarkets' involvement in the catastrophe-risk sector.”

The largest of the eight tranches were $300 million sponsored byZenkyoren; $275 million for U.S. hurricane and earthquake sponsoredby Liberty Mutual; and a $200 million tranche sponsored by NorthCarolina Farm Bureau Mutual Insurance Co. and COUNTRY MutualInsurance Co. that was brought by Swiss Re to cover U.S. hurricane,earthquake and severe weather.

In the report, Frank Majors, managing principal and co-founderof Nephila, a reinsurance-risk-investment manager, comments on theILS market, noting that “…the market is just starting to mature,though the maturation process could take many forms and we do notthink extrapolating to assume that the future looks like a biggerversion of the present will provide a very accurate forecast.”