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Cat Bond Market Growing, Maturing

Source: Bestwire

Posted on 30 Aug 2010

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According to the latest issue of BestWeek U.S./Canada, not only has the catastrophe bond market continued to rebound from the financial turmoil of 2008, it's maturing to become more than just a tool for reinsurers.

The first half of 2010 continued the trend of strong returns for the insurance-linked securities sector after the financial crisis. New issuance for the first six months reached $2.5 billion, which is 40% higher than last year and 73% of the total issued in 2009, said Swiss Re in a report.

"Things have been really picking up," Judy Klugman, managing director and head of industry-linked securities distribution for Swiss Re, told BestWeek. "There's a significant amount of capital coming into the sector."

In BestWeek Europe, with the approach of Solvency II in the European Union, the Lloyd's market is making greater use of actuarial skills, according to the Lloyd's Market Association, which represents Lloyd's managing agents.

Also in BestWeek U.S./Canada, financial institutions in developed nations worldwide reeled from the effects of the financial crisis that began in September 2008. But Canada and its life insurers escaped the worst of the crisis. Canada's financial-services regulatory framework and positive relationships between regulators and companies all played a role in insulating life insurers from the adverse effects of the recession, according to Frank Swedlove, president of the Canadian Life and Health Insurance Association.