Wednesday, June 2, 2010

"Ten catastrophe bonds close before hurricane season" (Transfer of risk 68 pct higher than same time last year)

We've got us a meme!
From Reuters:

* U.S. hurricane season expected to be worst since 2005

* Most deals planned before hurricane forecasts released

By Sarah Hills

LONDON, June 1 (Reuters) - Reinsurers transferred $2.35 billion in catastrophe risk to capital markets before the U.S. hurricane season that began on Tuesday, higher than the $1.4 billion last year, as the catastrophe bond sector starts to resume normal issuance after the global financial crisis.

The cat bond sector, in which insurers transfer risks associated with natural disasters to investors, is expected to end the year at $4 billion to $5 billion, according to market participants.

The market ended 2009 with nearly $3.4 billion of risk capital through 18 transactions, a 25 percent rise over 2008.

When U.S. investment bank Lehman Brothers filed for bankruptcy in September 2008, investors were left with direct exposure to market losses on the collateral assets, and four bonds were downgraded by ratings agency Standards & Poor's....MORE

HT: Dr. Hazlett at the Climate+Energy Project blog