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.
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.