The report, Cat Bond Update: Third Quarter 2009 says that a number of trends are converging that could result in a total of between $3 billion and $4 billion of issuance in 2009, implying a fourth quarter issuance rate of $1.2 billion to $2.2 billion. These include an increase in risk capital and the recent upsizing of catastrophe bonds in the third quarter of 2009.

According to the briefing, new risk capital issued in the third quarter of 2009 rose 28.8 percent compared with the third quarter of 2008. Two transactions, both closed in July 2009, resulted in $412 million of new risk capital issued, up from $320 million during the second quarter of 2008.

For the first three quarters of 2009, a total of 11 catastrophe bonds have been issued, accounting for $1.79 billion in risk capital. Year-to-date issuance activity has been down 33.5 percent versus the same period in 2008.

Looking towards the next quarter, Guy Carpenter says improvement in global financial market conditions improving and advances in the insurance-linked securities collateral solutions – coupled with a stronger demand for issuance and the increasing capacity of investors – have resulted in a shift in the ILS market relative to the beginning of 2009.