Cat bonds move to mainstream as institutional investors buy

Luca Albertini, chief executive of Amlin owned investor Leadenhall Capital, says Cat bond prices are up 3% since the end of May and more capital is coming to the market, the FT reports.

"There have been substantial mark to market gains over the summer," he says. "First this is because there is less about general contagion from the rest of the capital markets and second there is much more money coming in to the market once again."

"This is the riskiest part of the year so normally spreads would widen [and bond prices fall]."

Institutional investors

Espen Nordhus, of Securis, set up with funds from Swiss Re, says the market is also being helped by interest from institutional investors.

"In the early days this market only involved very specialist, niche investors," he says. "But there is a trend among pension funds and other traditional investors getting more interested in insurance as an asset class."