December 7th, 2011

Chart: Catastrophe Bonds Risk Capital Outstanding, 2004-2011YTD

Posted at 1:00 AM ET

Total risk capital outstanding increased from the second to the third quarter 2011, reaching USD10.70 billion - up from USD10.64 billion, representing a net increase of 0.56 percent (USD60 million). This is the first quarter that risk capital outstanding increased since the fourth quarter 2010. The sector continues to sustain net new cash inflows and the first and second quarters 2011 included significant maturities of existing cat bonds. Consequently, the market is still seeking additional issuance. These factors should manifest as strong support for transactions coming to market during the fourth quarter 2011 and into the first quarter 2012.

Risk capital outstanding peaked at the end of 2007, at USD14.02 billion. It then fell to USD11.19 billion by the end of the first quarter 2009 and thereafter remained within a range of USD10.9 billion and USD12.5 billion before dropping to USD10.6 billion at the end of the second quarter 2011. Comparing the current pipeline with the modest (USD2.15 billion) amount of scheduled maturities prior to June 30, 2012, we expect that total risk capital outstanding should trend upwards, potentially significantly, over the balance of 2011 and during the 2012 calendar year.

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