LONDON (Reuters) – Two catastrophe bonds placed late in December boosted sales of such transactions to more than $6 billion in 2012, the second highest annual total in the market's history.
The two bonds, which will protect insurers Zurich and AIG against losses associated with potential natural disasters in the United States and Canada, were listed on the Bermuda Stock Exchange (BSX) on December 27 and 28.
They bring total issuance of 'cat bonds' to $6.3 billion in 2012 – nearing the highest ever total of $7 billion, hit in 2007 before sales fell sharply as the financial crisis struck.
The market for cat bonds has since improved, with investors soothed by changes to the instruments' structure, the double-digit returns they offer, and a growing perception they are insulated from mainstream financial and economic shocks.
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