Global catastrophe bond issuance this year may beat the $US7 billion ($7.45 billion) record set in 2007, according to Guy Carpenter.

Pension funds have been a major driver of new capital growth, GC Securities’ mid-year market report says.

“Their focus on relatively remote peak peril catastrophe risk has contributed to the boom in the catastrophe bond market [this year], with issuance reaching $US4.8 billion ($4.24 billion) in the first seven months.”

This compares with $US5.85 billion ($6.2 billion) for the whole of last year.

“Risk capital outstanding also reached an all-time high of about $US16.6 billion ($17.68 billion) during the [first seven months].”

In the 18 months to last month $US10 billion ($10.65 billion) of new capital entered the market, with the greatest effect on the US property catastrophe reinsurance sector, the report says.

From the end of 2011 to June 30 this year, convergence capital contributed half the growth in global deployed reinsurance capital.

The new supply is changing the sector’s capital structure, the report says.

“The capital supporting convergence capacity is increasingly stable institutional money that has made a long-term commitment to the reinsurance market.”

Insurers are also increasingly targeting emerging markets for growth, particularly China and southeast Asia and Latin America, the report says.