NU Online News Service, May 16, 1:01 p.m. EDT
More than $2 billion in catastrophe-bond maturities are not expected to impact the overall size of the market, as new money coming in should keep the industry growing, a Guy Carpenter report says.
The report says more than $711 million in risk capital matured in 2012's first quarter. But the quarter also saw a record $1.34 billion in new bonds issued.
According to Guy Carpenter's report, there were four programs that matured in the quarter:
- Groupama sponsored a $136 million bond covering French Windstorm.
- SCOR sponsored three tranches covering U.S. hurricane and earthquake totaling $200 million.
- Chubb sponsored a $150 million bond covering Florida hurricane risks.
- Liberty Mutual sponsored a $225 million tranche covering U.S. hurricane and earthquake.
For all of 2012, a total of $2.51 billion is scheduled to mature. Of that amount, $1.44 billion will mature before June 30.
But risk capital outstanding increased by more than 5 percent in the first quarter to $12.77 billion, and this trend is expected to continue.
The Guy Carpenter report says that since the peak in catastrophe bonds outstanding in 2007 at more than $14 billion, the markets have remained in a range between $11 and $12 billion, and are showing signs of growth.
The market hit a low of $10.6 billion at the end of 2011's second quarter but has grown steadily since.
"Given the amount of scheduled maturities and the current and potential pipeline, we are optimistic that risk capital outstanding should continue to increase," says the report.
Pricing and capacity in the traditional reinsurance market, as well as catastrophe activity, will affect bond issuance going forward, Guy Carpenter notes.
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