Long an adjunct of the insurance and reinsurance sectors, the catastrophe bond market appears primed to become a more mainstream allocation alternative in 2012. This shift is prompted by issuers' growing capital needs and the incentive that the risk from natural disasters it mitigates is not correlated with the manmade financial variety. While 2011 new-issuance volume is anticipated to end up just short of last year's numbers, and outstanding cat bond issuance remains about the same, indications point to a strong 2012.
Cory Anger, managing director and global head of global linked securities (GLS) structuring at GC Securities, the investment banking arm of reinsurance broker Guy Carpenter, noted the firm's active pipeline, adding that overall she "wouldn't be surprised to see 15 deals in the first half" compared to eight completed last year during the same period. Twelve deals were completed in the second half of 2011.