Travelers Cos., raised $500 million selling catastrophe bonds, the biggest issuance this year of securities that allow investors to bet against natural disasters, Bloomberg reports.
“We got some distance from the fixed-income crisis and the market appetite for risk has come back,” said Peter Nakada, managing director at Risk Management Solutions Inc., which builds models to predict hurricane damage. “Lots of maturing cat bonds put cash into the hands of specialist investors and that created a better environment for issuers to issue.”
According to the president of Aon Benfield Securities, Paul Schultz, Catastrophe-bond issuance in 2009 may reach $3.5 billion, exceeding the $2.7 billion placed in 2008. Four catastrophe bonds have been issued since Sept. 30, compared with none in the last three months of 2008 when investors shied from the market amid the financial crisis.
