The third quarter of 2013 saw $1.4 billion of non-lifecatastrophe bond capacity issued through seven bonds, in comparisonwith $0.5 billion issued through three bonds in the third quarterof 2012, according to Willis Capital Markets & Advisory (WCMA),part of Willis Group Holdings (NYSE: WSH), the global risk advisor,insurance and reinsurance broker.

Third quarter 2013 catastrophe bond issuance was approximatelythree times higher than the five year average and was the higheston record since 1998, according to WCMA in its latest 'InsuranceLinked Securities' (ILS) report.

Bill Dubinsky, Head of ILS at WCMA, said: “If fourth quarterissuance remains at a similar level to that of recent years it willbe a record year for ILS issuance, surpassing the 2007 record.Outstanding capacity has now grown in each of the past five years,with the currently outstanding capacity of $17.3 billion,representing an all-time high.”

Elsewhere in the report, WCMA explores how some traditionalreinsurers are responding to the influx of capital into thereinsurance market, by managing increasing amounts of investorcapital in funds and sidecars, as well as sponsoring dealsthemselves.

Dubinsky added: “Some investors are encouraging more catastrophebond issuance so that they can continue to fulfil mandates forliquid investments. Other investors are chasing the illiquidity incollateralised reinsurance as a mechanism to protect themselvesfrom the ruthless price pressure in a well run syndicationprocess.”

The report also contains an interview with Dr AndreasMüller, Head of Origination, Distribution and ILSinvestments at Munich Re's Risk Trading Unit.

To download the report click here.