From the standpoint of catastrophe bond issuance, the third quarter of 2010 was consistent with historical cat bond market precedent. Following a second quarter of eight transactions and USD2.05 billion of issuance, activity was light as two transactions closed (the same number of transactions as in the third quarter of 2009), generating USD232 million of risk capital (1). Both transactions were received positively and were in fact over-subscribed. Issuance, however, was outstripped by significant maturities of existing catastrophe bonds prompting risk capital outstanding to decline seven percent over the course of the third quarter. At quarter end risk capital outstanding stood at USD10.99 billion, roughly equal to mid-year 2006. Market sentiment remains positive as catastrophe bonds (and catastrophe risk generally) as an asset class is clearly on the rise.
* Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd., which is authorized and regulated by the Financial Services Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies, Inc. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.