Last week, U.S. insurer USAA sold $130 million of cat bonds, data provider Artemis said, giving investors the chance to bet on events as diverse as a volcano eruption or a meteor strike for the first time.
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The size of the deal was increased from $100 million following strong appetite, as sales of cat bonds have boomed so far this year.
Chief market strategist at Rosenblatt Securities, Brian Reynolds said the appetite for such bonds illustrated that investors should expect more "complex, esoteric, and opaque structured finance deals than ever."
"While these deals will likely eventually contribute to a financial disaster, that event is not likely to happen for a number of years because our nation's pensions and other large investors have fresh cash pouring into them on which they need to earn a high yield," said Reynolds.
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Investors pumped $1.2 billion into catastrophe bonds in the first quarter of this year according to Verisk's Property Claim Services, with the amount issued up 37 percent over the same period last year, making for the third-largest quarter in "cat bond" history.
Cat bonds, once the preserve of hedge funds, insurers and reinsurers are now contending with pension funds, which have rushed into the sector in the last two years making yields not as attractive as they once were.
Last year, data from Swiss Re showed pension funds accounted for 14 percent of direct investment in new cat bonds issued, up from 0 percent in 2007.
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