Overall losses for reinsurers aren’t having a negative impact on catastrophe bonds, in fact the market is moving along quite nicely, according to Swiss Re.
Swiss Re's on Wednesday said preliminary estimates for economic losses from natural catastrophes and man-made disasters reached $140 billion in 2012. Swiss Re estimates that just $65 billion of these losses were insured. That's above the 10-year average, but less than 2011's historic tally of more than $120 billion.
According to Swiss Re estimates, there has been $6 billion in new issuance in 2012, with about $15.5 billion of bonds outstanding. That is the second highest volume of new issuance since 2007.
Judy Klugman, who is the managing director for Swiss Re capital markets, said that the company is bullish that catastrophe bonds will see increasing demand over the next year and we will see more and more deals come to market.
“The bonds are meant to compliment what is available in the traditional [insurance] markets and we certainly see that with continued economic growth in these catastrophe prone areas, that there is going to be an even greater need for these bonds,” she said.
Klugman said that issuers see this and will continue to come to market and institutional investors are interested in putting money to work in this asset class. “We see sponsors who see the value of using this alternative capacity source for their risk management needs,” she said.