A.M. Best video on the prospects for the catastrophe bond market in 2012


Here’s a video from ratings agency A.M. Best in which their managing senior financial analyst of insurance-linked securities, Asha Attoh-Okine, discusses the brisk start to 2012 for the catastrophe bond market and what the rest of the year could bring for the asset class. The video was published on the 19th March, and begins by saying that 2012 has seen the largest volume of issuance for Q1 in five years. With more cat bond deals actively being marketed and still to complete we could now be looking at a record Q1 volume of issuance.

Two main factors have contributed to the brisk cat bond issuance we are seeing, the increase in prices in the traditional reinsurance and retro markets combined with ILS investors who have ample cash to invest, according to Asha. When asked whether we could see a record issuance year for cat bonds in 2012, Asha explains that it is possible as we are already seeing so much issuance and are so far ahead of most historical Q1 cat bond volumes. The other reason we could have a record year for cat bonds is the large amount of dedicated capital in the market (particularly that with the dedicated ILS investors) and also the amount of capital sitting on the sidelines ready to be invested in the catastrophe bond asset class.

The video also discusses A.M. Best’s methodology for rating cat bonds.

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