Q4 cat bonds could be as much as 55% of the full year

Guy Carpenter has said there could be $2.2bn of catastrophe bonds issued in the fourth quarter – more than the rest of the year put together and as much as 55% pf the year’s total.

“Consensus estimate for 2009 total issuance remains from $3bn to $4bn, implying a fourth quarter issuance rate of $1.2bn to $2.2bn. If this level is attained, it would represent 40% to 55% of the issuance in 2009 and would make the fourth quarter the most active of 2009. A fourth quarter accounting for greater than 40% of any year’s total issuance has been reached only once (in 2004),” the Guy Carpenter reports said.

Other report news:

  • New risk capital issued in the third quarter was up 28.8% on 2008. From $320m to$ 412m.
  • For the first three quarters of 2009, 11 catastrophe bonds were issued, for $1.79bn in risk capital. (2008: 13 issuances, worth $2.69bn)
  • Year-to-date issuance activity is down 33.5 percent from the same period in 2008
  • In the third quarter of 2009, $300m in catastrophe bond risk capital matured, bringing the year-to-date total to $2.54bn. $660mis scheduled to mature in the fourth quarter of this year
  • Total risk capital outstanding grew 1% from the second quarter of 2009 to $11.3bn
  • Risk capital outstanding peaked at the end of 2007, at $14.0bn. It then fell to $12bn by the end of 2008 before reaching $11.3bn at the end of July 2009. The current level is consistent with that of mid-year 2007.
  • Of the $412m issued in the third quarter of 2009, $200m had exposure exclusively to US hurricane, and $212m had exposure to European windstorm
  • Pricing remains down 15% to 20% compared with January 2009 and is now consistent with 2007 mid-wind season levels.