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BestWeek: Primary Insurers Become Kings of Cat Bonds

Source: BestWeek

Posted on 05 Jan 2010

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Primary writers tapping the catastrophe bond market helped make 2009 the third-biggest year for new cat bond risk capital issued, according to the January 4, 2010, edition of BestWeek U.S./Canada.

In 2009, $3.4 billion of risk capital was issued through 18 cat bonds, which marks a 25% increase in risk capital issued over 2008, according to Guy Carpenter. That makes 2009 the busiest year for new cat bonds since 2007, and the third largest ever in terms of total capital issued.

More than 60% of the issuers in 2009 were primary companies as compared to reinsurers, the more traditional sponsors of catastrophe bonds, said Chi Hum, head of distribution for GC Securities, a division of MMC Securities Corp.

Also in BestWeek U.S./Canada, a federal insurance office, systemic risk regulator, consumer protection agency and new derivatives regulations are still in negotiation among U.S. senators in the Banking, Housing and Urban Affairs Committee. The reforms could represent some of the greatest changes to federal regulation of insurance in generations.

In BestWeek Europe, worldwide catastrophe activity in 2009 was “very light” and similar to the previous two years, making this the third straight relatively benign year, according to broker Aon Benfield. Reinsurer Munich Re found that natural catastrophe losses took a big dip in 2009, and tallied insured losses for the year at $22 billion, down from $50 billion the previous year. But Munich Re also warned that weather-related events are increasing in frequency, a trend it says points to climate-change risks.