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Member, Beacon International Group, Ltd.
Some $1.99 billion in new catastrophe bonds were issued in the fourth quarter of 2011 in nine transactions, according to a report released Tuesday by Aon Benfield Securities.
Fourth-quarter issuance represented 43% of the year's total activity of more than $4.6 billion in new insurance-linked securities, the investment banking division of Chicago-based reinsurance intermediary Aon Benfield said. 2007 is the current record year with approximately $8.38 billion in new issuance.
The quarter's most active catastrophe bond sponsor was National Union Fire Insurance Co. of Pittsburgh, Pa. The three tranches in National Union's Compass Re Ltd. deal totaled $575 million, covering U.S. hurricane and earthquake exposures.
The Aon Benfield report noted that several deals that came to market in the fourth quarter were larger than issuers' original targets, “illustrating that strong investor demand was met with additional supply.” Issues in the final three months of 2011 represented almost $800 million more than original offering amounts, Aon Benfield said.
The report, “Insurance-Linked Securities 2011: Fourth Quarter Update,” notes that nearly $1.5 billion in fourth-quarter 2011 ILS issuance was exposed to U.S. hurricane risk. It also said primary and secondary cat bond markets were “very active” throughout the quarter.