Last year saw the most active fourth quarter ever for catastrophe bond issuance, reaching almost $1.1 billion in total volume, eclipsing the previous best fourth quarter by over 75 percent. Risk Management Solutions announced it conducted the expert risk analysis for as much as 70 percent of these bonds. While the second quarter of the year has traditionally been the most active as companies seek coverage before the start of the hurricane season, favorable pricing in the second half of 2009 led more companies to choose insurance-linked securities as an alternative to reinsurance before the January 1 renewals.
RMS said it has seen growing appetite for catastrophe bonds as spreads have returned to pre-credit crunch levels and the cost of issuing has dropped by 30 to 40 percent over the last six months.
RMS said that ILS activity looks set to remain high in 2010 as a record volume of catastrophe bonds is due to mature, much of which was issued in 2007 ― the most active year ever for ILS to date. Of approximately $5 billion of bonds due to expire, between 50 to 80 percent is yet to be renewed.