LONDON (Reuters) – Sales of catastrophe bonds, used by insurersas a way of selling on their exposure to natural disasters, areclose to levels last seen before the financial crisis, new datashows.
|A flood of capital from pension and hedge funds, drawn by 5-7percent yields for many so-called “cat bonds” when more traditionalassets pay rock bottom rates, has driven down prices and hurtprofitability for reinsurers.
|Figures from insurance broker Willis published on Wednesday showtotal issuance during 2013 reached $7.1 billion, close to the $7.2billion record reached during 2007.
|The competition from such alternative sources of capital – oncethe preserve of specialist money managers -is blamed for pushingreinsurance prices down by more than a fifth in the lucrativemarket for hurricane coverage in the United States.
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