NU Online News Service, Nov. 9, 1:47 p.m. EST
Placements in the catastrophe-bond market are off 30 percent last year's pace primarily due to 2011 first-half catastrophe losses, says a report from Willis Group Holdings.
In its Insurance-Linked Securities Market Update for November, Willis says up through the 2011 third quarter, the market has seen a total of $2.28 billion in new catastrophe bond issuance compared to $2.98 billion for the same period last year.
The third quarter saw four cat bond issuances in five tranches for a total of $676 million. This was an increase of $196 million over last year's third quarter, says Willis.
The five tranches were issued by four sponsors:
- Munich Re with a single $150 million for European wind events.
- California Earthquake Authority with a $150 million tranche for earthquake events.
- French energy company EDF with two tranches totaling $215 million for wind events.
- Tokio Marine & Nichido Fire a $160 tranche for Japanese typhoons.
Willis notes that despite these placements the market remains "heavily weighted towards U.S. wind risk."
A "robust" fourth quarter of placements is expected to carry over into 2012, the report says.
Several factors will influence this push, says Willis, including pent up demand and regulatory uncertainty beyond the 2012 first quarter relating to the Dodd-Frank financial services reform act and other regulatory changes.
The regulatory changes are not expected to pose an "insurmountable threat," but could increase cost and complexity of the programs going into the second quarter of 2012 and beyond, Willis notes.
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