Primary insurers issue lions share of cat bonds; private issuers next?

One interesting fact of the catastrophe bonds issued during 2009 is the amount that have originated from primary insurers rather than from reinsurers. Historically the majority of cat bonds are issued by reinsurance companies looking to offset the risks they have taken on from primary insurers but 2009 saw that change.

According to Best Week, 60% of the cat bonds launched during 2009 were from primary insurers. This change seems to have mainly been due to primary insurers taking advantage of the huge appetite amongst investors for insurance-linked security notes while reinsurers have found capacity and capital elsewhere.

This does lead one to think that we could see private corporations begin to take a more serious look at issuing catastrophe bonds themselves in future. It’s becoming easier to arrange special purpose vehicles and with corporations having plenty of risks to hedge it would make sense to see an increasing number of them try to cut out the insurer middle man and attempt to access the market themselves. Market sources say they have had some interest from private entities and it may be that facilities such as the MultiCat program could be extended to offer a way to access the capital markets to private companies as well as countries. What do you think?