May 2010/1

US insurer Nationwide Mutual has closed the $185mn renewal of its 2008 Caelus Re cat bond, taking 2010 ILS issuance over the $2bn mark.

Blue Fin III has priced and placed successfully, with $150mn notes issued in two tranches: $90mn Class A and $60mn Class B.

Market data

Diversifying perils may not be the key to a happier, healthier ILS market, according to investors, amid a surprising amount of debate within the investor community on the importance of diversifying the risk ceded into the capital markets.

Risk-picking and innovation key for traditional and non-traditional capacity to support troubled Sunshine State

A sluggish first quarter saw total ILS issuance of $300mn - just 50 percent of what was achieved in the same quarter of 2009 - but in contrast during Q2 there will be between five and 10 cat bonds, according to reports from brokers Aon Benfield Securities and Guy Carpenter.

Recent months have seen significant levels of trading in ILS with close-dated maturities - or stub bonds - leading up to the 2010 Atlantic hurricane season.

Secondary pricing on distressed bonds was a mixed bag in the first quarter of 2010. Blue Coast, Kamp, Newton and Willow recovered as Nelson Re's G class, Avalon Re and Crystal Credit wallowed in the doldrums.

Four additional transactions through April and the start of May pushed total issuance in 2010 to $1.6bn. Three transactions were sponsored by US primary insurers while the fourth came from German giant Munich Re.

There has been a storm of cat bond activity in recent weeks with $810mn of notes placed in May, and $850mn of notes in the pipeline expected to close before June.

$10mn of trades on IFEX; Dodd Bill warning; RMS extends Paradex to Japan

An increase in speculative trading of weather derivative instruments could benefit the traded and customised end-user sectors, according to industry experts.