PRINCETON, N.J.—Munich Reinsurance America Inc. has placed a catastrophe bond to cover two North Carolina insurance groups' hurricane exposures, Standard & Poor's Corp. said Monday.

The bond, issued by Cayman Islands-based special-purpose vehicle Johnston Re Ltd., was placed on behalf of two North Carolina nonprofits that have insurance companies as members: the North Carolina Joint Underwriting Assn. and the North Carolina Insurance Underwriting Assn.

The deal provides reinsurance protection against hurricane losses in North Carolina and the Barrier Islands through May 2013. The bond will be triggered by storm losses on a per-occurrence basis experienced by the two insurers during that period, S&P said.

New York-based S&P rated the notes BB-. The value of the bonds has not been disclosed, although market sources say a $200 million target has been set.

One tranche of the Johnston Re bond will replace similar coverage that is to expire in 2011, S&P said. The July 2009 Parkton Re Ltd. deal was placed by Swiss Reinsurance America on behalf of the two North Carolina groups, providing $200 million of similar reinsurance protection.

Experts say the cat bond market is expected to gain momentum in the second quarter this year amid favorable pricing conditions for sponsors.