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Swiss Re launches cat bond indices


ZURICH, Switzerland— Swiss Reinsurance Co., the Zurich, Switzerland-based reinsurance company, has launched a group of catastrophe bond performance indices.

The company said that the creation of the Swiss Re Cat Bond Indices is a "first and important step in significantly increasing the transparency of cat bond returns."

Swiss Re said that the issuance of cat bonds doubled last year to $4.9 billion.

It believes that strong growth continued in the first half of 2007 with some $3.8 billion issued so far this year.

Swiss Re believes that its indices will help create further interest in secondary market trading as the primary market continues to build.

The indices are constructed to track the price return and the total rate of return for U.S. dollar-denominated cat bonds. They will track the performance of the main "basket," that comprises all outstanding dollar denominated catastrophe bonds.

The following sub-baskets comprise the main basket: single-peril U.S. wind cat bonds; single-peril California earthquake cat bonds; 'BB' Cat Bonds rated by credit rating agency Standard & Poor's Corp.

Dan Ozizmir, Swiss Re's managing director with overall responsibility for insurance-linked securities, said in a statement: "These indices will significantly improve the transparency of cat bond returns and thus attract additional investors to the asset class, further improving interest in the secondary market."

He also said that if the response of the market is positive then it hopes to work with other market participants to ensure that the indices become tradable.