Swiss Re Insurance-Linked Fund Management

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Catastrophe bond risk capital outstanding up $1.1 billion at 31st March 2012


At the 31st March 2012 the amount of risk capital outstanding in the catastrophe bond market was up $1.1 billion year-on-year according to data from Aon Benfield. Achieving positive growth in this metric of the market is seen as important to the ongoing development of the cat bond and insurance-linked securities sector as the greater the volume of cat bonds on risk at any point in time the greater the opportunity for investors to deploy capital into the marketplace.

Of course, everyone has different figures to hand for the amount of risk capital outstanding given that different types of risk are included by some and not by others. What’s important though is that the market is growing, helped by the recent brisk issuance in the primary cat bond market which has now resulted in two record quarters in succession.

A number of cat bonds are maturing and coming off risk in April, so the amount of risk capital outstanding may have dropped since Aon Benfield wrote their report (depending on which recently completed bonds they included), but with the pipeline still active it looks like the market will continue to grow over the next few months.

At the 31st March 2012 Aon Benfield put the amount of risk capital outstanding in the catastrophe bond market at $14.2 billion. A year earlier the number was $13.1 billion according to their figures.

At the end of 2011 the amount of cat bond risk capital outstanding was over $12 billion and the cat bond and ILS market as a whole (including life deals) was approximately $14 billion. It would be encouraging to see those numbers rise significantly at the end of 2012.

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